20-F

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 20-F

(Mark One)
o	REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
or
þ	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended December 31, 2008
or
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 1-10409

InterContinental Hotels Group PLC

(Exact name of registrant as specified in its charter)

England and Wales

(Jurisdiction of incorporation or organization)

Broadwater Park,

Denham, Buckinghamshire UB9 5HR

(Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
American Depositary Shares	New York Stock Exchange
Ordinary Shares of 1329/47 pence each	New York Stock Exchange*

* Not for trading, but only in connection with the registration of American Depositary Shares, pursuant to the requirements of the Securities and Exchange Commission.

Securities registered or to be registered pursuant to Section 12(g) of the Act:
None

Securities for which there is a reporting obligation pursuant to Section 15(d)of the Act:
None

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:

Ordinary Shares of 1329/47 pence each 285,552,193

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act:  Yes þ     No o

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934:  Yes o     No þ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days:  Yes þ     No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

     Large accelerated filer  þ          Accelerated filer  o          Non-accelerated filer  o

Indicate by check mark which financial statement item the registrant has elected to follow:

Item 17 o     Item 18  þ

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):

Yes          o                No          þ

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

US GAAP o International Reporting Standards as issued by
the International Standards Accounting Board þ Other  o

TABLE OF CONTENTS

		Page
Introduction		4
Cautionary Note Regarding Forward-Looking Statements		5
PART I
Item 1.	Identity of Directors, Senior Management and Advisors	7
Item 2.	Offer Statistics and Expected Timetable	7
Item 3.	Key Information	7
	Selected Consolidated Financial Information	7
	Risk Factors	11
Item 4.	Information on the Company	14
	Summary	14
	Segmental Information	18
	Hotels	20
	Soft Drinks	37
	Trademarks	37
	Organizational Structure	37
	Property, Plant and Equipment	39
	Environment	39
Item 4A.	Unresolved Staff Comments	40
Item 5.	Operating and Financial Review and Prospects	40
	Critical Accounting Policies	40
	Operating Results	42
	Liquidity and Capital Resources	51
Item 6.	Directors, Senior Management and Employees	53
	Directors and Senior Management	53
	Compensation	56
	Board Practices	57
	Employees	60
	Share Ownership	61
Item 7.	Major Shareholders and Related Party Transactions	62
	Major Shareholders	62
	Related Party Transactions	62
Item 8.	Financial Information	62
	Consolidated Statements and Other Financial Information	62
	Significant Changes	63
Item 9.	The Offer and Listing	63
	Plan of Distribution	64
	Selling Shareholders	64
	Dilution	64
	Expenses of the Issue	64

2

		Page
Item 10.	Additional Information	64
	Memorandum and Articles of Association	64
	Material Contracts	66
	Exchange Controls	69
	Taxation	69
	Documents on Display	73
Item 11.	Quantitative and Qualitative Disclosures About Market Risk	73
Item 12.	Description of Securities Other Than Equity Securities	74
PART II
Item 13.	Defaults, Dividend Arrearages and Delinquencies	75
Item 14.	Material Modifications to the Rights of Security Holders and Use of Proceeds	75
Item 15.	Controls and Procedures	75
Item 16.	[Reserved]	75
Item 16A.	Audit Committee Financial Expert	75
Item 16B.	Code of Ethics	75
Item 16C.	Principal Accountant Fees and Services	76
Item 16D.	Exemptions from the Listing Standards for Audit Committees	76
Item 16E.	Purchases of Equity Securities by the Issuer and Affiliated Purchasers	76
Item 16F.	Change in Registrant’s Certifying Accountant	77
Item 16G.	Summary of Significant Corporate Governance Differences from NYSE Listing Standards	77
PART III
Item 17.	Financial Statements	78
Item 18.	Financial Statements	79
Item 19.	Exhibits	79

3

INTRODUCTION

As used in this document, except as the context otherwise requires, the terms:

•  “board” refers to the board of directors of InterContinental Hotels Group PLC or, where appropriate, the board of InterContinental Hotels Limited or Six Continents Limited;

•  “Britvic” refers to Britannia Soft Drinks Limited for the period up to November 18, 2005, and thereafter, Britannia SD Holdings Limited (renamed Britvic plc on November 21, 2005) which became the holding company of the Britvic Group on November 18, 2005;

•  “Britvic Group” refers to Britvic and its subsidiaries from time to time;

•  “Company” refers to InterContinental Hotels Group PLC, InterContinental Hotels Limited or Six Continents Limited or their respective board of directors as the context requires;

•  “Group” refers to InterContinental Hotels Group PLC and its subsidiaries or, where appropriate, InterContinental Hotels Limited or Six Continents Limited and their subsidiaries as the context requires;

•  “Hotels” or “IHG Hotels” refers to the hotels business of the Group;

•  “IHG” refers to InterContinental Hotels Group PLC or, where appropriate, its board of directors;

•  “IHL” refers to InterContinental Hotels Limited, previously InterContinental Hotels Group PLC, former parent company of the Group and re-registered as a private limited company on June 27, 2005;

•  “ordinary share” or “share” refers, before April 14, 2003, to the ordinary shares of 28 pence each in Six Continents Limited; following that date and until December 10, 2004 to the ordinary shares of £1 each in IHL; following that date and until June 27, 2005 to the ordinary shares of 112 pence each in IHL; following that date and until June 12, 2006 to the ordinary shares of 10 pence each in IHG; following that date until June 4, 2007 to the ordinary shares of 113/7 pence each in IHG; and following June 4, 2007 to the ordinary shares of 1329/47 pence each in IHG;

•  “Six Continents” refers to Six Continents Limited; previously Six Continents PLC and re-registered as a private limited company on June 6, 2005;

•  “Soft Drinks” and “Britvic business” refer to the soft drinks business of InterContinental Hotels Group PLC, which the Company had through its controlling interest in Britvic and which the Company disposed of by way of an initial public offering effective December 14, 2005; and

•  “VAT” refers to UK value added tax levied by HM Revenue and Customs on certain goods and services.

References in this document to the “Companies Act” mean the Companies Act 1985, as amended, of Great Britain; references to the “EU” mean the European Union; references in this document to “UK” refer to the United Kingdom of Great Britain and Northern Ireland; references to “US” refer to the United States of America.

The Company publishes its Consolidated Financial Statements expressed in US dollars. On May 30, 2008, IHG announced its intention to change its reporting currency from sterling to US dollars, reflecting the profile of its revenue and operating profit, which are primarily generated in US dollars or US dollar-linked currencies. This change was first introduced in the interim results for the six months to June 30, 2008, and the financial statements included herein are IHG’s first annual financial statements to be presented in US dollars and all comparative information has been restated accordingly.

In this document, references to “US dollars”, “US$”, “$” or ‘‘¢” are to United States currency, references to “euro” or “€” are to the euro, the currency of the European Economic and Monetary Union, references to “pounds sterling”, “sterling”, “£”, “pence” or “p” are to UK currency. Solely for convenience, this Annual Report on Form 20-F contains translations of certain pound sterling amounts into US dollars at specified rates. These translations should not be construed as representations that the pound sterling amounts actually represent such US dollar amounts or could be converted into US dollars at the rates indicated. The noon buying rate in The City of New York for cable transfers in pounds sterling as certified for customs purposes by the Federal Reserve Bank of

4

New York on March 23, 2009 was £1.00 = $1.45. For further information on exchange rates please refer to page F-19.

The Company’s fiscal year ends on December 31. The December 31 fiscal year end is in line with the calendar accounting year ends of the majority of comparable US and European hotel companies. IHG will continue to report on a December 31 fiscal year end basis, as the Group believes this facilitates more meaningful comparisons with other key participants in the industry. References in this document to a particular year are to the fiscal year unless otherwise indicated. For example, references to the year ended December 31, 2008 are shown as 2008 and references to the year ended December 31, 2007 are shown as 2007, unless otherwise specified, and references to other fiscal years are shown in a similar manner.

The Company’s Consolidated Financial Statements are prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and in accordance with IFRS as adopted by the European Union (“EU”). IFRS as adopted by the EU differs in certain respects from IFRS as issued by the IASB, however, the differences have no impact on the Group’s Consolidated Financial Statements for the years presented.

IHG believes that the reporting of profit and earnings measures before exceptional items provides additional meaningful information on underlying returns and trends to shareholders. The Group’s key performance indicators used in budgets, monthly reporting, forecasts, long-term planning and incentive plans for internal financial reporting focus primarily on profit and earnings measures before exceptional items. Throughout this document earnings per ordinary share is also calculated excluding the effect of all exceptional operating items, exceptional interest, exceptional tax and gain on disposal of assets and is referred to as adjusted earnings per ordinary share.

The Company furnishes JP Morgan Chase Bank, N.A., as Depositary, with annual reports containing Consolidated Financial Statements and an independent auditor’s opinion thereon. These Financial Statements are prepared on the basis of IFRS. The Company also furnishes to the Depositary all notices of shareholders’ meetings and other reports and communications that are made generally available to shareholders of the Company. The Depositary makes such notices, reports and communications available for inspection by registered holders of ADRs and mails to all registered holders of ADRs notices of shareholders’ meetings received by the Depositary. During 2008, the Company reported interim financial information at June 30, 2008 in accordance with the Listing Rules of the UK Listing Authority. In addition, it provided quarterly financial information at March 31, 2008 and at September 30, 2008 and intends to continue to provide quarterly financial information during fiscal 2009. The Financial Statements may be found on the Company’s website at www.ihg.com.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Form 20-F contains certain forward-looking statements as defined in Section 21E of the Securities Exchange Act of 1934 with respect to the financial condition, results of operations and business of InterContinental Hotels Group and certain plans and objectives of the Board of Directors of InterContinental Hotels Group PLC with respect thereto. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements often use words such as “anticipate”, “target”, “expect”, “estimate”, “intend”, “plan”, “goal”, “believe”, or other words of similar meaning. These statements are based on assumptions and assessments made by InterContinental Hotels Group’s management in light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe to be appropriate.

Such statements in the Form 20-F include, but are not limited to, statements under the following headings; (i) “Item 4. Information on the Company”; (ii) Item 5. Operating and Financial Review and Prospects”; (iii) “Item 8. Financial Information”; and (iv) “Item 11. Quantitative and Qualitative Disclosures About Market Risk”. Specific risks faced by the Company are described under “Item 3. Key Information — Risk Factors” commencing on page 11.

5

By their nature, forward-looking statements are inherently predictive, speculative and involve risk and uncertainty. There are a number of factors that could cause actual results and developments to differ materially from those expressed in, or implied by, such forward-looking statements, including, but not limited to: the global economic recession, the risks involved with the Group’s reliance on the reputation of its brands and protection of its intellectual property rights; the risks relating to identifying, securing and retaining management and franchise agreements; the effect of political and economic developments; the organizational capability to manage changes in key personnel and senior management; events that adversely impact domestic or international travel; the risks involved in the Group’s reliance upon its proprietary reservations system and increased competition in reservations infrastructure; the risks in relation to technology and systems; the risks of the hotel industry supply and demand cycle; the possible lack of selected development opportunities; the risks related to corporate responsibility; the risk of litigation; the risks associated with the Group’s ability to maintain adequate insurance; the risks associated with the Group’s ability to borrow and satisfy debt covenants; compliance with data privacy regulations; the risks related to information security; and the risks associated with funding the defined benefits under its pension plans.

6

PART I

ITEM 1.   IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

Not applicable.

ITEM 2.   OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3.   KEY INFORMATION

SELECTED CONSOLIDATED FINANCIAL INFORMATION

Summary

The selected consolidated financial data set forth below for the years ended December 31, 2008, 2007, 2006, 2005 and 2004 has been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and in accordance with IFRS as adopted by the European Union (“EU”), and is derived from the Consolidated Financial Statements of the Group which have been audited by its independent registered public accounting firm, Ernst & Young LLP.

IFRS as adopted by the EU differs in certain respects from IFRS as issued by the IASB, however, the differences have no impact on the Group’s Consolidated Financial Statements for the years presented. The selected consolidated financial data set forth below should be read in conjunction with, and is qualified in its entirety by reference to, the Consolidated Financial Statements and Notes thereto included elsewhere in this Annual Report.

7

Consolidated Income Statement Data

	Years ended December 31,
	2008			2007			2006			2005			2004
	$			$			$			$			$
	(in millions, except per share and ADS amounts)
Revenue:
Continuing operations		1,854			1,771			1,446			1,274			1,107
Discontinued operations		43			79			319			2,212			2,912
		1,897			1,850			1,765			3,486			4,019
Total operating profit before exceptional operating items:
Continuing operations		535			474			367			321			228
Discontinued operations		14			17			57			298			403
		549			491			424			619			631
Exceptional operating items:
Continuing operations		(132	)		60			48			(27	)		(44	)
Discontinued operations		—			—			—			(13	)		(45	)
		(132	)		60			48			(40	)		(89	)
Total operating profit:
Continuing operations		403			534			415			294			184
Discontinued operations		14			17			57			285			358
		417			551			472			579			542
Financial income		12			18			48			54			128
Financial expenses		(113	)		(108	)		(68	)		(115	)		(188	)
Profit before tax		316			461			452			518			482
Tax:
On profit before exceptional items		(101	)		(90	)		(97	)		(161	)		(102	)
On exceptional items		17			—			(11	)		—			40
Exceptional tax		25			60			184			15			294
		(59	)		(30	)		76			(146	)		232
Profit after tax		257			431			528			372			714
Gain on disposal of assets, net of tax		5			32			226			605			34
Profit for the year		262			463			754			977			748
Attributable to:
Equity holders of the parent		262			463			754			942			699
Minority equity interest		—			—			—			35			49
Profit for the year		262			463			754			977			748
Earnings per ordinary share:
Continuing operations:
Basic		86.4¢			131.3¢			126.5¢			40.7¢			66.2¢
Diluted		83.8¢			127.7¢			123.3¢			39.8¢			65.5¢
Total operations:
Basic		91.3¢			144.7¢			193.8¢			180.8¢			105.4¢
Diluted		88.5¢			140.7¢			189.0¢			176.7¢			104.2¢

8

Consolidated Balance Sheet Data

	December 31,
	2008			2007*		2006		2005		2004
	$			$		$		$		$
	(in millions)
Goodwill and intangible assets		445			556		516		411		397
Property, plant and equipment		1,684			1,934		1,956		2,340		3,716
Investments and other financial assets		195			253		251		267		235
Retirement benefit assets		40			49		—		—		—
Current assets		544			710		892		1,220		1,154
Non-current assets classified as held for sale		210			115		98		481		3,523
Total assets		3,118			3,617		3,713		4,719		9,025
Current liabilities		1,141			1,226		1,261		1,370		1,786
Long-term debt		1,334			1,748		594		707		2,230
Net assets		1			98		1,346		1,905		3,739
Share capital		118			163		129		84		1,395
IHG shareholders’ equity		(6	)		92		1,330		1,870		3,513
Number of shares in issue at period end (millions)		286			295		356		433		622

* Restated in relation to IFRIC 14 (see page F-11).

Dividends

InterContinental Hotels Group PLC paid an interim dividend of 6.4 pence per share (equivalent to 12.2 cents per ADS at the closing exchange rate of August 8, 2008) on October 3, 2008. The IHG Board has proposed a final dividend of 20.2 pence per share (equivalent to 29.2 cents per ADS at the closing exchange rate on February 13, 2009), payable on June 5, 2009, if approved by shareholders at the Annual General Meeting to be held on May 29, 2009, bringing the total IHG dividend for the year ended December 31, 2008 to 26.6 pence per share (equivalent to 41.4 cents per ADS).

The table below sets forth the amounts of interim, final and total dividends on each ordinary share in respect of each fiscal year indicated. Comparative dividends per share have been restated using the aggregate of the weighted average number of shares of InterContinental Hotels Group PLC (as IHL then was) and Six Continents PLC (as Six Continents then was), adjusted to equivalent shares of InterContinental Hotels Group PLC. For the purposes of showing the dollar amounts per ADS in respect of the interim and final dividends 2004, and interim dividend 2005, such amounts are translated into US dollars per ADS at the Noon Buying Rate on each of the respective UK payment dates. In respect of the final dividend 2005 and the interim and final dividends for each of 2006, 2007 and 2008, such amounts are translated into US dollars immediately prior to their announcement.

Ordinary dividend

	Pence per ordinary share						$ per ADS
	Interim		Final		Total		Interim		Final		Total
Year ended December 31
2004		4.30		10.00		14.30		0.077		0.191		0.268
2005		4.60		10.70		15.30		0.081		0.187		0.268
2006		5.10		13.30		18.40		0.096		0.259		0.355
2007		5.70		14.90		20.60		0.115		0.292		0.407
2008		6.40		20.20		26.60		0.122		0.292		0.414

9

Special Dividend

	Pence per
	ordinary share		$ per ADS
June 2006		118.00		2.17
June 2007		200.00		4.00

Return of Capital

	Pence per
	ordinary share		$ per ADS
June 2005		165.00		2.86

10

RISK FACTORS

This section describes some of the risks that could materially affect the Group’s business. The factors below should be considered in connection with any financial and forward-looking information in this Form 20-F and the cautionary note regarding forward-looking statements contained on pages 5 and 6.

The unprecedented financial events of late 2008 and the resulting global recession are having, and will continue to have, a significant impact on the Group and the wider hotel industry. In particular, over the relatively short-term, the main risks are falling consumer demand, restrictions on the availability of debt for owners, and a fall in the pace of new room openings. The risks below are not the only ones that the Group faces. Some risks are not yet known to IHG and some that IHG does not currently believe to be material could later turn out to be material. All of these risks could materially affect the Group’s business, revenue, operating profit, earnings, net assets and liquidity and/or capital resources.

The Group is reliant on the reputation of its brands and the protection of its intellectual property rights

Any event that materially damages the reputation of one or more of the Group’s brands and/or failure to sustain the appeal of the Group’s brands to its customers could have an adverse impact on the value of that brand and subsequent revenues from that brand or business. In addition, the value of the Group’s brands is influenced by a number of other factors, some of which may be outside the Group’s control, including commoditization (whereby price and/or quality becomes relatively more important than brand identifications due, in part, to the increased prevalence of third-party intermediaries), consumer preference and perception, failure by the Group or its franchisees to ensure compliance with the significant regulations applicable to hotel operations (including fire and life safety requirements), or other factors affecting consumers’ willingness to purchase goods and services, including any factor which adversely affects the reputation of those brands.

In particular, where the Group is unable to enforce adherence to its operating and quality standards, or the significant regulations applicable to hotel operations, pursuant to its management and franchise contracts, there may be further adverse impact upon brand reputation or customer perception and therefore the value of the hotel brands.

Given the importance of brand recognition to the Group’s business, the Group has invested considerable effort in protecting its intellectual property, including registration of trademarks and domain names. However, the controls and laws are variable and subject to change. Any widespread infringement, misappropriation or weakening of the control environment could materially harm the value of the Group’s brands and its ability to develop the business.

The Group is exposed to a variety of risks related to identifying, securing and retaining management and franchise agreements

The Group’s growth strategy depends on its success in identifying, securing and retaining management and franchise agreements. This is an inherent risk for the hotel industry and franchise business model. Competition with other hotel companies may generally reduce the number of suitable management, franchise and investment opportunities offered to the Group and increase the bargaining power of property owners seeking to engage a manager or become a franchisee. The terms of new management or franchise agreements may not be as favorable as current arrangements and the Group may not be able to renew existing arrangements on the same terms.

There can also be no assurance that the Group will be able to identify, retain or add franchisees to the Group system or to secure management contracts. For example, the availability of suitable sites, planning and other local regulations or the availability and affordability of finance may all restrict the supply of suitable hotel development opportunities under franchise or management agreements. In connection with entering into management or franchise agreements, the Group may be required to make investments in, or guarantee the obligations of, third parties or guarantee minimum income to third parties. There are also risks that significant franchisees or groups of franchisees may have interests that conflict, or are not aligned, with those of the Group including, for example, the unwillingness of franchisees to support brand improvement initiatives.

Changes in legislation or regulatory changes may be implemented that have the effect of favoring franchisees relative to brand owners.

11

The Group is exposed to the risks of political and economic developments

The Group is exposed to the inherent risks of global and regional adverse political, economic and financial market developments, including recession, inflation, availability of affordable credit and currency fluctuations that could lower revenues and reduce income. A recession reduces leisure and business travel to and from affected countries and adversely affects room rates and/or occupancy levels and other income-generating activities, resulting in deterioration of results of operations and potentially reducing the value of properties in affected economies. The owners or potential owners of hotels managed or franchised by one group face similar risks which could adversely impact IHG’s ability to retain and secure management or franchise agreements. More specifically, the Group is highly exposed to the US market and, accordingly, is particularly susceptible to adverse changes in the US economy.

Further political or economic factors or regulatory action could effectively prevent the Group from receiving profits from, or selling its investments in, certain countries, or otherwise adversely affect operations. For example, changes to tax rates or legislation in the jurisdictions in which the Group operates could decrease the proportion of profits the Group is entitled to retain, or the Group’s interpretation of various tax laws and regulations may prove to be incorrect, resulting in higher than expected tax charges.

The Group requires organizational capability to manage changes in key personnel and senior management

In order to develop, support and market its products, the Group must hire and retain highly skilled employees with particular expertise. The implementation of the Group’s strategic business plans could be undermined by failure to recruit or retain key personnel, the unexpected loss of key senior employees, failures in the Group’s succession planning and incentive plans, or a failure to invest in the development of key skills. Some of the markets in which the Group operates are experiencing economic growth and the Group must compete against other companies inside and outside the hospitality industry for suitably qualified or experienced employees. Failure to attract and retain these employees may threaten the success of the Group’s operations in these markets. Additionally, unless skills are supported by a sufficient infrastructure to enable knowledge and skills to be passed on, the Group risks losing accumulated knowledge if key employees leave the Group.

The Group is exposed to the risk of events that adversely impact domestic or international travel

The room rates and occupancy levels of the Group could be adversely impacted by events that reduce domestic or international travel, such as actual or threatened acts of terrorism or war, epidemics, travel-related accidents, travel-related industrial action, increased transportation and fuel costs and natural disasters resulting in reduced worldwide travel or other local factors impacting individual hotels. A decrease in the demand for hotel rooms as a result of such events may have an adverse impact on the Group’s operations and financial results. In addition, inadequate preparedness, contingency planning or recovery capability in relation to a major incident or crisis may prevent operational continuity and consequently impact the value of the brand or the reputation of the Group.

The Group is reliant upon its proprietary reservations system and is exposed to the risk of failures in the system and increased competition in reservations infrastructure

The value of the brands of the Group is partly derived from the ability to drive reservations through its proprietary HolidexPlus reservations system, a central repository of all hotel room inventories linked electronically to multiple sales channels including IHG owned Internet websites, third-party Internet intermediaries and travel agents, call centers and hotels.

Lack of resilience in operational availability could lead to prolonged service disruption and may result in significant business interruption and subsequent impact on revenues. Lack of investment in these systems may also result in reduced ability to compete additionally, failure to maintain an appropriate e-commerce strategy and select the right partners could erode the Group’s market share.

12

The Group is exposed to certain risks in relation to technology and systems

To varying degrees, the Group is reliant upon certain technologies and systems (including IT systems) for the running of its business, particularly those which are highly integrated with business processes. Disruption to those technologies or systems could adversely affect the efficiency of the business, notwithstanding business continuity or disaster recovery processes. The Group may have to make substantial additional investments in new technologies or systems to remain competitive. Failing to keep pace with developments in technologies or systems may put the Group at a competitive disadvantage. The technologies or systems that the Group chooses may not be commercially successful or the technology or system strategy employed may not be sufficiently aligned with the needs of the business or responsive to changes in business strategy. As a result, the Group could lose customers, fail to attract new customers or incur substantial costs or face other losses.

The Group is exposed to the risks of the hotel industry supply and demand cycle

The future operating results of the Group could be adversely affected by industry over capacity (by number of rooms) and weak demand due, in part, to the cyclical nature of the hotel industry, or other differences between planning assumptions and actual operating conditions. Reductions in room rates and occupancy levels would adversely impact the results of Group operations.

The Group may experience a lack of selected development opportunities

While the strategy of the Group is to extend the hotel network through activities that do not involve significant amounts of its own capital, if the availability of suitable development sites becomes limited for IHG and its prospective hotel owners, this could adversely affect its results of operations.

The Group is exposed to risks related to corporate responsibility

The reputation of the Group and the value of its brands are influenced by a wide variety of factors, including the perception of key stakeholders and the communities in which the Group operates. The social and environmental impacts of business are under increasing scrutiny, and the Group is exposed to the risk of damage to its reputation if it fails to demonstrate sufficiently responsible practices in a number of areas such as safety and security, sustainability, responsible tourism, environmental management, human rights and support for the local community.

The Group is exposed to the risk of litigation

The Group could be at risk of litigation from many parties, including guests, customers, joint venture partners, suppliers, employees, regulatory authorities, franchisees and/or the owners of hotels managed by it. Claims filed in the United States may include requests for punitive damages as well as compensatory damages. Exposure to litigation or fines imposed by regulatory authorities may also affect the reputation of the Group.

The Group may face difficulties insuring its business

Historically, the Group has maintained insurance at levels determined by it to be appropriate in light of the cost of cover and the risk profiles of the business in which it operates. However, forces beyond the Group’s control including market forces, may limit the scope of coverage the Group can obtain and the Group’s ability to obtain coverage at reasonable rates. Other forces beyond the Group’s control, such as terrorist attacks or natural disasters may be uninsurable or simply too expensive to insure. Inadequate or insufficient insurance could expose the Group to large claims or could result in the loss of capital invested in properties, as well as the anticipated future revenue from properties, and could leave the Group responsible for guarantees, debt or other financial obligations related to such properties.

The Group is exposed to a variety of risks associated with its ability to borrow and satisfy debt covenants

The Group is reliant on having access to borrowing facilities to meet its expected capital requirements. The majority of the Group’s borrowing facilities are only available if the financial covenants in the facilities are complied with. If the Group is not in compliance with the covenants, the lenders may demand the repayment of the

13

funds advanced. If the Group’s financial performance does not meet market expectations it may not be able to refinance its existing facilities on terms it considers favorable. The availability of funds for future financing is, in part, dependent on conditions and liquidity in the capital markets.

The Group is required to comply with data privacy regulations

Existing and emerging data privacy regulations limit the extent to which the Group can use customer information for marketing or promotional purposes. Compliance with these regulations in each jurisdiction in which the Group operates may require changes in marketing strategies and associated processes which could increase operating costs or reduce the success with which products and services can be marketed to existing or future customers. In addition, non-compliance with privacy regulations may result in fines, damage to reputation or restrictions on the use or transfer of information.

The Group is exposed to the risks related to information security

The Group is increasingly dependent upon the availability, integrity and confidentiality of information and the ability to report appropriate and accurate business performance, including financial reporting, to investors and markets.

The reputation and performance of the Group may be adversely affected if it fails to maintain appropriate confidentiality of information and ensure relevant controls are in place to enable the release of information only through the appropriate channels in a timely and accurate manner.

The Group is exposed to funding risks in relation to the defined benefits under its pension plans

The Group is required by law to maintain a minimum funding level in relation to its ongoing obligation to provide current and future pensions for members of its UK pension plans who are entitled to defined benefits. In addition, if certain Plans of the Group are wound-up, the Group could become statutorily liable to make an immediate payment to the trustees to bring the funding of defined benefits to a level which is higher than this minimum. The contributions payable by the Group must be set with a view to making prudent provision for the benefits accruing under the plans of the Group.

In particular, the trustees of IHG’s UK defined benefit plan may demand increases to the contribution rates relating to the funding of this plan, which would oblige relevant employers of the Group to contribute extra amounts. The trustees must consult the plan’s actuary and principal employer before exercising this power. In practice, contribution rates are agreed between the Group and the trustees on actuarial advice, and are set for three-year terms. The last such review was as at March 31, 2006.

ITEM 4.   INFORMATION ON THE COMPANY

SUMMARY

Group Overview

The Group is a worldwide owner, manager and franchisor of hotels and resorts. Through its various subsidiaries it owned, leased, managed, or franchised 4,186 hotels and 619,851 guest rooms in nearly 100 countries around the world, as at December 31, 2008. The Group’s brands include InterContinental Hotels & Resorts (“InterContinental”), Crowne Plaza Hotels & Resorts (“Crowne Plaza”), Holiday Inn Hotels & Resorts (“Holiday Inn”), Holiday Inn Express (or Express by Holiday Inn outside of the Americas), Staybridge Suites, Candlewood Suites and Hotel Indigo. The Group also manages the hotel loyalty program, Priority Club Rewards.

With the disposal of the Group’s interests in Britvic, a manufacturer and distributor of soft drinks in the United Kingdom, by way of an initial public offering (“IPO”) in December 2005, the Group is now focused solely on hotel franchising, management and ownership.

The Group’s revenue and earnings are derived from (i) hotel operations, which include operation of the Group’s owned hotels, management and other fees paid under management contracts, where the Group operates

14

third-parties’ hotels, and franchise and other fees paid under franchise agreements and (ii) until December 14, 2005, the manufacture and distribution of soft drinks.

On March 23, 2009, InterContinental Hotels Group PLC had a market capitalization of approximately £1.6 billion, and was included in the list of FTSE 100 companies, a list of the 100 largest companies by market capitalization on the London Stock Exchange.

Following a capital restructuring in June 2005, InterContinental Hotels Group PLC became the holding company for the Group. Six Continents Limited (formerly Six Continents PLC), which was formed in 1967, is the principal subsidiary company. The Company’s corporate headquarters are in the United Kingdom, and the registered address is:

InterContinental Hotels Group PLC

Broadwater Park

Denham

Buckinghamshire UB9 5HR

Tel: +44 (0) 1895 512000

Internet address: www.ihg.com

InterContinental Hotels Group PLC was incorporated in Great Britain on May 21, 2004 and registered in, and operates under, the laws of England and Wales. Operations undertaken in countries other than England and Wales are subject to the laws of those countries in which they reside.

Group History and Recent Developments

The Group, formerly known as Bass and, more recently, Six Continents, was historically a conglomerate operating as, among other things, a brewer, soft drinks manufacturer, hotelier, leisure operator, and restaurant, pub and bar owner. In the last several years, the Group has undergone a major transformation in its operations and organization, as a result of the Separation (as discussed below) and a number of significant disposals during this period, which has narrowed the scope of its business.

On April 15, 2003, following shareholder and regulatory approval, Six Continents PLC (as it then was) separated into two new listed groups, InterContinental Hotels Group PLC (as it then was) comprising the Hotels and Soft Drinks businesses and Mitchells & Butlers plc comprising the Retail and Standard Commercial Property Developments businesses (the “Separation”).

The Group disposed of its interests in the soft drinks business by way of an initial public offering (“IPO”) of Britvic, a manufacturer and distributor of soft drinks in the United Kingdom, in December 2005.

Acquisitions and Dispositions

Since the Separation, 183 hotels with a net book value of $5.2 billion have been sold, generating aggregate proceeds of $5.5 billion. Of these 183 hotels, 164 hotels have remained in the IHG global system (the number of hotels and rooms owned, leased, managed or franchised by the Group) through either franchise or management agreements. As of March 23, 2009 the Group had on the market a further 5 hotels.

During 2008, the Group disposed of the Holiday Inn Jamaica for $30 million.

The Group also divested a number of equity interests of which proceeds totaled $61 million, including a 31.25% interest in the Crowne Plaza Christchurch for $24 million and a 17.0% interest in the Crowne Plaza Amsterdam for $20 million.

The asset disposal program which commenced in 2003 has significantly reduced the capital requirements of the Group whilst largely retaining the hotels in the IHG system through management and franchise agreements.

Capital expenditure in 2008 totaled $108 million compared with $186 million in 2007 and $228 million in 2006.

15

At December 31, 2008 capital committed, being contracts placed for expenditure on property, plant and equipment not provided for in the financial statements, totaled $40 million.

On October 24, 2007 the Group announced a worldwide relaunch of its Holiday Inn brand family. In support of this relaunch, the Group will make a non-recurring revenue investment of $60 million which will be charged to the income statement as an exceptional item, $35 million was charged in 2008.

Following the completion of the hotel disposals in 2008, the Group owns 16 hotels.

FIGURE 1

Asset disposal program detail	Number of hotels		Proceeds		Net book value
	($ billion)
Disposed since April 2003		183		5.5		5.2
Remaining owned and leased hotels as of December 31, 2008		16		—		1.7

Return of Funds

Since March 2004, the Group has announced the return of £3.6 billion of funds to shareholders by way of special dividends, share repurchase programs and capital returns. As of March 23, 2009 IHG had returned over £3.5 billion to shareholders (see Figure 2).

A third £250 million share repurchase program was completed in 2007 and the £150 million share repurchase program announced on February 20, 2007 was commenced. At December 31, 2008 £30 million of this share repurchase program was outstanding. During 2008 9.2 million shares were repurchased at an average price of 759 pence per share (total £70 million). The precise timing of share purchases is dependent upon, amongst other things, market conditions. By March 23, 2009, a total of 14.4 million shares had been repurchased under the £150 million repurchase program at an average price per share of 831 pence per share (approximately £120 million). Purchases are made under the existing authority from shareholders which will be renewed at the Company’s Annual General Meeting. Any shares repurchased under these programs will be canceled.

The program was deferred in November 2008 in order to preserve cash and maintain the strength of IHG’s balance sheet.

Information relating to the purchases of equity securities can be found in Item 16E.

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FIGURE 2

Return of funds program	Timing		Total return		Returned to date(i)		Still to be returned
£501 million special dividend		Paid in December 2004		£501m		£501m		Nil
First £250 million share buyback		Completed in 2004		£250m		£250m		Nil
£996 million capital return		Paid in July 2005		£996m		£996m		Nil
Second £250 million share buyback		Completed in 2006		£250m		£250m		Nil
£497 million special dividend		Paid in June 2006		£497m		£497m		Nil
Third £250 million share buyback		Completed in 2007		£250m		£250m		Nil
£709 million special dividend		Paid in June 2007		£709m		£709m		Nil
£150 million share buyback		Deferred		£150m		£120m		£30m
Total				£3,603m		£3,573		£30m

(i) As of March 23, 2009.

Hotels

IHG, through various subsidiaries, owns a number of hotel brands including InterContinental, Crowne Plaza, Holiday Inn, Holiday Inn Express, Staybridge Suites, Candlewood Suites and Hotel Indigo. As of December 31, 2008, IHG’s brands comprised 4,186 franchised, managed, owned or leased hotels and 619,851 rooms in nearly 100 countries.

Soft Drinks

In December 2005 IHG disposed of its interests in Britvic, one of the two leading manufacturers of soft drinks by value and volume in Great Britain, by way of an IPO. IHG received aggregate proceeds of approximately £371 million (including two additional dividends, one of £47 million received in November 2005 and another of £89 million received in May 2005, before any commissions or expenses). The Group results for fiscal 2005 include the results of Soft Drinks for the period up until the IPO of Britvic on December 14, 2005.

17

SEGMENTAL INFORMATION

Geographic Segmentation

The following table shows revenue and operating profit before exceptional operating items in US dollars and percentage by geographical area, for the following periods: years ended December 31, 2008, 2007 and 2006.

	Year ended December 31,
	2008			2007			2006
	($ million)
Revenue(1)
Americas		920			902			778
Europe, the Middle East and Africa		518			492			363
Asia Pacific		290			260			204
Central(4)		126			117			101
Continuing operations		1,854			1,771			1,446
Americas		43			62			74
Europe, the Middle East and Africa		—			17			245
Discontinued operations(3)		43			79			319
Total		1,897			1,850			1,765
Operating profit before exceptional operating items(1)(2)
Americas		451			440			395
Europe, the Middle East and Africa		171			134			69
Asia Pacific		68			63			52
Central(4)		(155	)		(163	)		(149	)
Continuing operations		535			474			367
Americas		14			16			12
Europe, the Middle East and Africa		—			1			45
Discontinued operations(3)		14			17			57
Total		549			491			424

Footnotes on page 19.

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	Year ended December 31,
	2008			2007			2006
	(%)
Revenue
Americas		48.5			48.8			44.0
Europe, the Middle East and Africa		27.3			26.5			20.6
Asia Pacific		15.3			14.1			11.6
Central		6.6			6.3			5.7
Continuing operations		97.7			95.7			81.9
Americas		2.3			3.4			4.2
Europe, the Middle East and Africa		—			0.9			13.9
Discontinued operations		2.3			4.3			18.1
Total		100.0			100.0			100.0
Operating profit before exceptional operating items
Americas		82.1			89.6			93.1
Europe, the Middle East and Africa		31.1			27.3			16.3
Asia Pacific		12.4			12.8			12.3
Central		(28.2	)		(33.2	)		(35.1	)
Continuing operations		97.4			96.5			86.6
Americas		2.6			3.3			2.8
Europe, the Middle East and Africa		—			0.2			10.6
Discontinued operations		2.6			3.5			13.4
Total		100.0			100.0			100.0

(1)	The results of operations have been translated into US dollars at the average rates of exchange for the period. In the case of the pound sterling, the translation rate is $1 = £0.55 (2007 $1 = £0.50, 2006 $1 = £0.54). In the case of the euro, the translation rate is $1 = €0.68 (2007 $1 = €0.73, 2006 $1 = €0.80).
(2)	Operating profit before exceptional operating items does not include exceptional operating items for all periods presented. Exceptional operating items (charge unless otherwise noted) by region are the Americas $99 million (2007 credit of $17 million, 2006 credit of $44 million); Europe, the Middle East and Africa $21 million (2007 credit of $21 million, 2006 credit of $4 million); Asia Pacific $2 million (2007 credit of $17 million, 2006 $nil); and Central $10 million (2007 credit of $5 million, 2006 $nil).
(3)	Discontinued operations were all owned and leased hotels.
(4)	Central revenue primarily relates to Holidex (IHG’s proprietary reservation system) fee income. Central operating profit includes central revenue less costs related to global functions.

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HOTELS

Overview

InterContinental Hotels Group PLC is an international hotel business which, through various subsidiaries, owns a portfolio of established and diverse hotel brands, including InterContinental, Crowne Plaza, Holiday Inn, Holiday Inn Express, Staybridge Suites, Candlewood Suites and Hotel Indigo, with 4,186 franchised, managed, owned and leased hotels and 619,851 guest rooms in nearly 100 countries as at December 31, 2008. Approximately 614,000 rooms or 99% of the Group’s rooms are operated under managed and franchised models.

The unprecedented financial events of late 2008 and the resulting global recession have had, and will continue to have, a significant impact on IHG and the wider hotel industry. IHG’s share price fell by 36% in 2008 and, although the Group outperformed its peers, whose aggregate share price fell by 49%, this is a major change in sentiment. IHG will continue to monitor key trends and indicators to ensure its strategy remains well suited to the developing environment and its capabilities. In essence, IHG believes its business is resilient and, accordingly, its strategy remains unchanged. However, IHG sees short-term risks in the pace of future openings, availability of debt and consumer demand. None of these factors is expected to require major change to IHG’s strategy and it remains focused on the medium to long-term, while it protects short-term profitability.

It is beyond doubt that this downturn is severe, with a sharp decline in revenue per available room (RevPAR) and bookings. However, IHG believes it is well placed to manage through this economic situation, despite its severity. While the current downturn is unusual in its rapidity, unpredictability and degree of credit restriction, the hotel industry has always been cyclical. Traditionally it has experienced periods of five to eight years of RevPAR growth followed by up to two years of declines in RevPAR. Demand has rarely fallen for sustained periods and it is the interplay between hotel supply and demand in the industry that drives longer-term fluctuations in RevPAR. The Group’s fee-based profit is partly protected from changes in hotel supply due to its model of third-party ownership of hotels under the Group’s management and franchise contracts. IHG profit varies more with hotel revenue (demand) than it does with hotel profit performance. IHG believes it is well placed over the coming year compared with competitors who own hotels, rather than simply operate them, as does the Group.

The global hotel market, has an estimated room capacity of 17.5 million rooms. This has grown at approximately 2% per annum over the last five years. Competitors in the market include other large hotel companies and independently owned hotels.

The market remains fragmented, with an estimated 7.7 million branded hotel rooms (approximately 45% of the total market). The Group has an estimated 8% share of the branded market (approximately 3% of the total market). The top six major companies, including IHG, together control approximately 42% of the branded rooms, only 19% of total hotel rooms.

Geographically, the market is more concentrated with the top 20 countries accounting for 80% of global hotel rooms. Within this, the United States is dominant (more than 25% of global hotel rooms) with China, Japan and Italy being the next largest markets. The Group’s brands have more leadership positions (top three by room numbers) in the six largest geographic markets than any other major hotel company.

US market data historically indicates a steady increase in hotel industry revenues, broadly in line with Gross Domestic Product, with growth of approximately 1.5% per annum in real terms since 1967. Globally, IHG believes demand is driven by a number of underlying trends:

•  change in demographics — as the population ages and becomes wealthier, increased leisure time and income encourages more travel and hotel visits; younger generations are increasingly seeking work/life balance, with positive implications for increased leisure travel;

•  increase in travel volumes as low-cost airlines grow rapidly;

•  globalization of trade and tourism;

•  increase in affluence and freedom to travel within emerging markets, such as China; and

•  increase in the preference for branded hotels amongst consumers.

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FIGURE 3

2007 branded hotel rooms by region as a percentage of the total market
United States	69	%
Europe, Middle East and Africa (“EMEA”)	33	%
Asia Pacific	29	%

Source: IHG Analysis, Northstar Travel Management, Smith Travel Research (STR)

Within the global market, a relatively low proportion of hotel rooms are branded; however, there has been an increasing trend towards branded rooms. Over the three years 2006, 2007 and 2008, the branded market (as represented by the nine major global branded hotel companies) has grown at a 3.6% compound annual growth rate (CAGR), over twice as quickly as the overall market implying an increased preference towards branded hotels. Branded companies are therefore gaining market share at the expense of unbranded companies. IHG is well positioned to benefit from this trend. Hotel owners are increasingly recognizing the benefits of working with IHG Hotels which can offer a portfolio of brands to suit the different real estate opportunities an owner may have, together with effective revenue delivery through global reservation channels. Furthermore, hotel ownership is increasingly being separated from hotel operations, encouraging hotel owners to use third parties such as IHG Hotels to manage or franchise their hotels.

Potential negative trends impacting hotel industry growth include the possibility of increased terrorism, environmental considerations and economic factors such as those now prevailing, namely recession and global credit restrictions.

IHG’s future growth will be achieved predominantly through managing and franchising rather than owning hotels. Approximately 614,000 rooms operating under Group brands are managed or franchised and 5,600 are owned and leased.

The managed and franchised fee-based model is attractive because it enables the Group to achieve its goals with limited capital investment at an accelerated pace. A further advantage is the reduced volatility of the fee-based income stream, compared with ownership of assets.

A key characteristic of the managed and franchised business is that it generates more cash than is required for investment in the business, with a high return on capital employed. During the year ended December 31, 2008, 85% of continuing earnings before regional and central overheads, exceptional items, interest and tax is derived from managed and franchised operations.

Operations

The Group currently operates an ‘asset-light’ business model and owns only a small number of hotels. Through three distinct business models which offer different growth, return, risk and reward opportunities, IHG achieves growth through its partnerships with financial participants who may provide capital in exchange for, among other things, the Group’s expertise and brand value. The models are summarized as follows:

franchised, where Group companies neither own nor manage the hotel, but license the use of a Group brand and provide access to reservations systems, loyalty schemes and know-how. The Group derives revenues from a brand royalty or licensing fee, based on a percentage of room revenue. At the end of 2008, 75% of the Group’s rooms were franchised, with 90% of rooms in the Americas operating under this model.

managed, where in addition to licensing the use of a Group brand, a Group company manages the hotel for third party owners. The Group derives revenues from base and incentive management fees and provides the system infrastructure necessary for the hotel to operate. Management contract fees are generally a percentage of hotel revenue and may have an additional incentive fee linked to profitability or cash flow. The terms of these agreements vary, but are often long-term (for example, 10 years or more). The Group’s responsibilities under the management agreement typically include hiring, training and supervising the managers and employees that operate the hotels under the relevant brand standards. In order to gain access to central reservations systems, global and regional brand

21

marketing and brand standards and procedures, owners are typically required to make a further contribution. At the end of 2008, 24% of the Group’s rooms were operated under management contracts.

owned and leased (“O & L”), where a Group company both owns (or leases) and operates the hotel and, in the case of ownership, takes all the benefits and risks associated with ownership. The Group has sold a significant proportion of its owned and leased portfolio and in future expects to own only hotels where it is considered strategically important to do so. Rooms owned or leased by the Group at the end of 2008 represented 1% of the Group’s rooms.

In addition, the Group also makes equity investments in hotel ownership entities, where its equity investment is less than 100% and it participates in a share of the benefits and risks of ownership. A management contract is generally entered into as well as the equity investment.

The following table shows the number of hotels and rooms owned, leased, managed or franchised by IHG as at December 31, 2008, 2007 and 2006.

					Management
					contracts and joint
	Owned or leased				ventures				Franchised				Total
	No. of		No. of		No. of		No. of		No. of		No. of		No. of		No. of
	hotels		rooms		hotels		rooms		hotels		rooms		hotels		rooms
2008		16		5,644		585		148,240		3,585		465,967		4,186		619,851
2007		18		6,396		539		134,883		3,392		443,815		3,949		585,094
2006		25		8,460		512		125,214		3,204		422,572		3,741		556,246

The Group sets quality and service standards for all of its hotel brands (including those operated under management contracts or franchise arrangements) and operates a customer satisfaction and hotel quality measurement system to ensure those standards are met or exceeded. The quality measurement system includes an assessment of both physical property and customer service standards.

Strategy

IHG seeks to deliver enduring top quartile shareholder returns, when measured against a broad global hotel peer group, by focusing on its core purpose of creating “Great Hotels Guests Love”. IHG aims to offer guests a level of service and hospitality that will encourage them to make return visits to the Group’s hotels.

We measure success in three ways:

•  Total Shareholder Returns — for the three-year period of 2006 to 2008, IHG was third among its peers;

•  Rooms Growth — rooms added to our brands at a rate faster than competitors. In 2008 we grew by 5.9% against an average of 4.3% for our main competitors; and

•  Key Performance Indicators — a basket of specific key performance indicators (KPIs) aimed at delivering our core purpose, cascaded to the hotel level.

Successful performance against various combinations of these, and other, metrics drives payment of a significant percentage of senior management discretionary remuneration.

IHG’s strategy has seen significant development through 2008 as the Group moved to make its core purpose a reality. IHG has taken a hard look at its operations and capabilities to focus on what really matters most to deliver Great Hotels Guests Love. IHG has backed this up with a major effort to align its people and measure the most important drivers, resulting in a clear, target-based program within its hotels to motivate teams and guide behaviours.

Our strategy now encompasses two key aspects:

•  where IHG chooses to compete; and

•  how the Group will win when it competes.

The Group’s underlying ‘Where’ strategy is that IHG will grow a portfolio of differentiated hospitality brands in select strategic countries and global key cities to maximize our scale advantage. The ‘How’ aspect of the Group’s

22

strategy flows from the Group’s core purpose and research at the hotel level as to what really makes a difference for guests.

In support of the Group’s overall strategy there are now five key priorities — one ‘Where we compete’ and four ‘How we win’:

Where we compete

•  To accelerate profitable growth of its core business in the largest markets where the Group currently has scale and also in key global cities. Seek opportunities to leverage our scale in new business areas.

How we win

•  Financial returns:  To generate higher returns for owners and IHG through revenue delivery and improved operating efficiency.

•  Our people:  To create a more efficient organization with strong core capabilities.

•  Guest experience:  To operate a portfolio of brands attractive to both owners and guests that have clear market positions and differentiation in the eyes of the guest.

•  Responsible business:  To take an active stance on environment and community issues in order to drive increased value for IHG, owners and guests.

In June 2005 IHG set an organic growth target of at least 50,000 to 60,000 net rooms to be added by the end of 2008, with specific growth targets for the InterContinental brand (15-25 net InterContinental hotel additions) and within the Chinese market (125 hotels in China). As at December 31, 2008, IHG had achieved organic growth of over 82,000 net rooms against the target set in June 2005, together with 23 net InterContinental hotel additions and 112 hotels in China (for China, the target is expected to be exceeded in early 2009).

The Group delivered its growth targets through its operating system which includes:

•  a strong brand portfolio across the major markets — IHG’s brands achieved revenue per available room (“RevPAR”) growth premiums within respective key market segments during 2008;

•  market coverage — a presence in nearly 100 countries;

•  scale — 4,186 hotels, and 619,851 rooms;

•  global reservations channels — delivering $7.6 billion of global system room revenue in 2008, including $2.6 billion from the internet;

•  Priority Club Rewards — a loyalty program, contributing $5.9 billion of global system room revenue in 2008; and

•  a strong web presence — holidayinn.com is one of the industry’s most visited sites, with around 87 million total site visits per annum.

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Segmental Results by Activity

The following table shows the Group’s continuing revenue and operating profit before exceptional operating items by activity and the percentage contribution of each activity for the following periods: years ended December 31, 2008, 2007 and 2006.

	Year ended
	December 31,
	2008			2007			2006
	($ million)
Continuing revenue(1)
Americas
Owned and leased		257			257			192
Managed		168			156			143
Franchised		495			489			443
		920			902			778
EMEA
Owned and leased		240			244			169
Managed		168			167			131
Franchised		110			81			63
		518			492			363
Asia Pacific
Owned and leased		159			145			131
Managed		113			99			65
Franchised		18			16			8
		290			260			204
Central(3)		126			117			101
Total		1,854			1,771			1,446
Continuing operating profit before exceptional operating items(1)(2)
Americas
Owned and leased		41			40			22
Managed		51			41			50
Franchised		426			425			382
Regional overheads		(67	)		(66	)		(59	)
		451			440			395
EMEA
Owned and leased		45			33			(7	)
Managed		95			87			68
Franchised		75			58			44
Regional overheads		(44	)		(44	)		(36	)
		171			134			69
Asia Pacific
Owned and leased		43			36			31
Managed		55			46			39
Franchised		8			6			5
Regional overheads		(38	)		(25	)		(23	)
		68			63			52
Central(3)		(155	)		(163	)		(149	)
Total		535			474			367

Footnotes on page 25.

24

	Year ended December 31,
	2008			2007			2006
	(%)
Continuing revenue
Americas
Owned and leased		13.9			14.5			13.3
Managed		9.0			8.8			9.9
Franchised		26.7			27.6			30.6
		49.6			50.9			53.8
EMEA
Owned and leased		12.9			13.8			11.7
Managed		9.1			9.4			9.0
Franchised		5.9			4.6			4.4
		27.9			27.8			25.1
Asia Pacific
Owned and leased		8.6			8.2			9.0
Managed		6.1			5.6			4.5
Franchised		1.0			0.9			0.6
		15.7			14.7			14.1
Central		6.8			6.6			7.0
Total		100.0			100.0			100.0
Continuing operating profit before exceptional operating items
Americas
Owned and leased		7.7			8.4			6.0
Managed		9.5			8.6			13.6
Franchised		79.6			89.7			104.0
Regional overheads		(12.5	)		(13.9	)		(16.0	)
		84.3			92.8			107.6
EMEA
Owned and leased		8.4			7.0			(1.9	)
Managed		17.8			18.4			18.5
Franchised		14.0			12.2			12.0
Regional overheads		(8.2	)		(9.3	)		(9.8	)
		32.0			28.3			18.8
Asia
Owned and leased		8.0			7.6			8.5
Managed		10.3			9.7			10.6
Franchised		1.5			1.3			1.4
Regional overheads		(7.1	)		(5.3	)		(6.3	)
		12.7			13.3			14.2
Central		(29.0	)		(34.4	)		(40.6	)
Total		100.0			100.0			100.0

(1)	The results of operations have been translated into US dollars at the average rates of exchange for the period. In the case of the pound sterling, the translation rate is $1 = £0.55 (2007 $1 = £0.50, 2006 $1 = £0.54). In the case of the euro, the translation rate is $1 = €0.68 (2007 $1 = €0.73, 2006 $1 = €0.80).
(2)	Operating profit before exceptional operating items does not include exceptional operating items for all periods presented. Exceptional operating items (charge unless otherwise noted) by region are the Americas $99 million (2007 credit of $17 million, 2006 credit of $44 million); Europe, the Middle East and Africa $21 million (2007 credit of $21 million, 2006 credit of $4 million); Asia Pacific $2 million (2007 credit of $17 million, 2006 $nil); and Central $10 million (2007 credit of $5 million, 2006 $nil).
(3)	Central revenue primarily relates to Holidex (IHG’s proprietary reservation system) fee income. Central operating profit includes central revenue less costs related to global functions.

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Global System

Hotels operated under the Group’s brands are, pursuant to terms within their contracts, subject to cash assessments for brand marketing, reservations systems and Priority Club membership stays. These assessments, typically based upon room revenue, are pooled within the system funds for the collective benefit of all hotels by brand or geography. The assessments are used for revenue generating activities including the costs of call centers, frequency program points, websites, sales teams, advertising and brand development and affiliate marketing programs.

Priority Club Rewards:  The Group operates the Priority Club Rewards loyalty program. Members enjoy a variety of privileges and rewards as they stay at the Group’s hotels around the world. Global system rooms sales generated from Priority Club Rewards members during 2008 were $5.9 billion and represented approximately 37% of IHG Hotels global system rooms sales.

Central Reservation System Technology:  The Group operates the HolidexPlus reservations system. The HolidexPlus system receives reservations requests entered on terminals located at most of its reservation centers, as well as from global distribution systems operated by a number of major corporations and travel agents. Where local hotel systems allow, the HolidexPlus system immediately confirms reservations or indicates alternative accommodation available within IHG’s network. Confirmations are transmitted electronically to the hotel for which the reservation is made.

Reservations Call Centers:  The Group operates 12 reservations centers around the world which enable it to sell in local languages in many countries and offer a high quality service to customers.

Internet:  The Group introduced electronic hotel reservations in 1995. The Internet continues to be an important communications, branding and distribution channel for the Group’s sales. During 2008, the internet channel continued to show strong growth, with global system rooms sales booked through the internet increasing by 21% to $2.6 billion. Approximately 20% (17% in 2007) of IHG global system rooms sales is via the internet through various branded websites, such as www.intercontinental.com and www.holidayinn.com, as well as certified third parties. IHG has established standards for working with third party intermediaries — on-line travel distributors — who sell or re-sell the Group’s branded hotel rooms via their internet sites. Under the standards, certified distributors are required to respect the Group’s trademarks, ensure reservations are guaranteed through an automated and common confirmation process, and clearly present fees to customers. About 86% of IHG Hotels’ global system rooms sales booked on the web is now booked directly through the Group’s own brand sites.

The Group estimates that, during 2008, global system rooms sales booked through these reservations systems (which include company reservations centers, global distribution systems and internet reservations) rose by approximately 10% to $7.6 billion, and the proportion of IHG Hotels’ global system rooms sales booked through the Group’s reservation channels increased from 45% to 48%.

Sales and Marketing

IHG targets its sales and marketing expenditure in each region on driving revenue and brand awareness or, in the case of sales investments, targeting segments such as corporate accounts, travel agencies and meeting organizers. The majority of IHG’s sales and marketing expenditure is funded by contractual fees paid by most hotels in the system.

The strategic goals for the global system as a whole include:

•  adding further locations and improving guest satisfaction for its brands;

•  continuing the focus on enrolments in Priority Club Rewards and increasing their share of the total hotel spend;

•  continuing to improve the direct channels; and

•  improving pricing structure.

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Global Brands

Brands Overview

The Group’s portfolio includes seven established and diverse brands. These brands cover several market segments and in the case of InterContinental, Crowne Plaza, Holiday Inn and Holiday Inn Express, operate internationally. During 2008, the first Staybridge Suites hotels opened outside the Americas, in Liverpool and Cairo and the first Hotel Indigo in London. Candlewood Suites operates exclusively in the Americas.

	December 31, 2008
Brands	Room numbers		Hotels
InterContinental		54,736		159
Crowne Plaza		93,382		342
Holiday Inn		249,691		1,353
Holiday Inn Express		173,794		1,932
Staybridge Suites		16,644		152
Candlewood Suites		20,641		204
Hotel Indigo		2,702		22
Other		8,261		22
Total		619,851		4,186

InterContinental

	Americas		Americas		EMEA		EMEA		Asia Pacific
	total		O & L		total		O & L		total
Average room rate $(1)		180.07		259.21		205.52		476.45		199.09
Room numbers(2)		18,502		1,914		20,836		1,293		15,398

(1)	For the year ended December 31, 2008; quoted at constant US$ exchange rate. Average room rate is for comparable InterContinental hotels.
(2)	As at December 31, 2008.

InterContinental hotels are located in major cities and leisure destinations in over 60 countries. Each hotel offers high-class facilities and services aimed at the discerning business and leisure traveler. The brand strives to provide guests with memorable experiences which also give a sense of each hotel’s location. These hotels blend luxury with a celebration of local culture and heritage which is reflected in everything from décor to dining.

InterContinental hotels are principally managed by the Group. As at December 31, 2008, there were 159 InterContinental hotels which represented 9% of the Group’s total hotel rooms. During 2008, 11 InterContinental hotels were added to the portfolio while one hotel was removed.

Crowne Plaza

	Americas		EMEA		Asia Pacific
	total		total		total
Average room rate $(1)		113.32		168.80		111.80
Room numbers(2)		51,124		20,729		21,529

(1)	For the year ended December 31, 2008; quoted at constant US$ exchange rate. Average room rate is for comparable Crowne Plaza hotels.
(2)	As at December 31, 2008.

Crowne Plaza is one of the fastest growing upscale hotel brands in the world, located in more than 55 countries. Crowne Plaza offers simple elegance and full-service facilities for business and leisure travelers alike. Mainly sited in principal cities, these hotels offer high quality accommodation for leisure and business travelers who appreciate style, a sociable environment, excellent meeting facilities and state-of-the-art business technology.

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The majority of Crowne Plaza hotels are operated under franchise agreements. As at December 31, 2008, there were 342 Crowne Plaza hotels which represented 15% of the Group’s total hotel rooms. During 2008, 50 Crowne Plaza hotels were added to the portfolio while seven hotels were removed.

Holiday Inn

	Americas		Americas		EMEA		Asia Pacific
	total		O & L		total		total
Average room rate $(1)		100.72		111.00		133.96		93.15
Room numbers(2)(3)		171,189		1,358		53,039		27,875

(1)	For the year ended December 31, 2008; quoted at constant US$ exchange rate. Average room rate is for comparable Holiday Inn hotels.
(2)	As at December 31, 2008.
(3)	The Americas total includes Holiday Inn Club Vacations (2,412 rooms).

Friendly service and great value are the hallmarks of the Holiday Inn brand. One of the world’s most recognized brands, Holiday Inn was relaunched in 2007 to improve the Group’s ability to meet guest needs for contemporary high-quality and consistent facilities. The relaunch includes a new identity and logo. Aimed at both business travelers and families on holiday, the brand continues to grow around the world.

Holiday Inn hotels are predominantly operated under franchise agreements. As at December 31, 2008, there were 1,353 Holiday Inn hotels which represented 40% of IHG’s total hotel rooms and of which 68% were located in the Americas. During 2008, 68 Holiday Inn hotels were added to the portfolio, while 96 hotels were removed.

In 2008, the Group launched Holiday Inn Club Vacations, which gives the Group its first presence in the timeshare market. The first Holiday Inn Club Vacations opened in Florida, in December 2008.

Holiday Inn Express

	Americas		EMEA		Asia Pacific
	total		total		total
Average room rate $(1)		99.90		115.37		59.79
Room numbers(2)		146,024		21,564		6,206

(1)	For the year ended December 31, 2008; quoted at constant US$ exchange rate. Average room rate is for comparable Holiday Inn Express hotels.
(2)	As at December 31, 2008.

Convenience, comfort and value make Holiday Inn Express a popular choice with guests and hotel owners. Contemporary guest rooms and bathrooms, a complimentary breakfast and easily accessible locations make this limited service Holiday Inn an ideal choice for people on the road. Holiday Inn Express was also relaunched in 2007.

Holiday Inn Express hotels are almost entirely operated under franchise agreements. As at December 31, 2008, there were 1,932 Holiday Inn Express hotels worldwide which represented 28% of the Group’s total hotel rooms and of which 84% were located in the Americas. During 2008, 212 new Holiday Inn Express hotels were added to the portfolio, while 88 hotels were removed.

Staybridge Suites

	Americas		EMEA
	total		total
Average room rate $(1)		107.62		—
Room numbers(2)		16,372		272

(1)	For the year ended December 31, 2008; quoted at constant US$ exchange rate. Average room rate is for comparable Staybridge Suite’s hotels.
(2)	As at December 31, 2008.

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Staybridge Suites is a high-end brand offering guests a home from home for extended hotel stays. Residential in style, they provide studios and suites, kitchens, living rooms and work areas, and high-speed internet access for business and leisure guests. The “Just Like Home” theatre and new buffet kitchen are communal areas where guests can meet and relax. In 2008, the first Staybridge Suites hotels opened outside the United States, in Liverpool, England, and Cairo, Egypt.

The Staybridge Suites brand is principally operated under management contracts and franchise agreements. As at December 31, 2008, there were 152 Staybridge Suites hotels, 150 of which are located in the Americas, which represented 3% of the Group’s total hotel rooms. During 2008, 30 hotels were added to the portfolio, and no hotels were removed.

Candlewood Suites

	Americas
	total
Average room rate $(1)		72.12
Room numbers(2)		20,641

(1)	For the year ended December 31, 2008; quoted at constant US$ exchange rate. Average room rate is for comparable Candlewood Suites hotels.
(2)	As at December 31, 2008.

Created for guest stays of a week or longer, Candlewood Suites offer studios and one bedroom suites with well equipped kitchens, spacious work areas and an array of convenient amenities. This extended stay brand continues to grow rapidly in the Americas and recently launched a new bedding collection.

The Candlewood Suites brand is operated under management contracts and franchise agreements. Hospitality Properties Trust (“HPT”) is a major owner of Candlewood Suites properties and the Group manages all 76 of HPT’s Candlewood Suites properties under a 20 year agreement. As at December 31, 2008, there were 204 Candlewood Suites hotels, all located in the Americas, which represented 3% of the Group’s total rooms. During 2008, 47 hotels were added to the portfolio and one was removed.

Hotel Indigo

	Americas		EMEA
	total		total
Average room rate $(1)		120.55		—
Room numbers(2)		2,638		64

(1)	For the year ended December 31, 2008; quoted at constant US$ exchange rate. Average room rate is for comparable Hotel Indigo hotels.
(2)	As at December 31, 2008.

Hotel Indigo is the industry’s first branded boutique hotel. The brand is aimed at style-conscious guests who want peaceful and affordable luxury combined with all the knowledge, experience and operating systems that an international hotel company can offer. Inspired by lifestyle retailing, it features seasonal changes, inviting service, inspiring artwork, casual dining, airy guest rooms and 24-hour business amenities.

The first Hotel Indigo opened in Atlanta, Georgia in the United States in October 2004. As at December 31, 2008, there were 22 Hotel Indigo hotels with 11 hotels added to the portfolio during the year including the first Hotel Indigo opened outside the United States, in London, England.

Geographical Analysis

Although it has worldwide hotel operations, the Group is most dependent on the Americas for operating profit, reflecting the structure of the branded global hotel market. The Americas region generated 65% of the Group’s continuing operating profit before central overheads and exceptional operating items during 2008.

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The geographical analysis, split by number of rooms and operating profit, is set out in the table below.

	Americas		EMEA		Asia Pacific
			(% of total)
Room numbers(1)		69		19		12
Regional operating profit (before central overheads and exceptional operating items)(2)		65		25		10

(1)	As at December 31, 2008.
(2)	For the year ended December 31, 2008.

The following table shows information concerning the geographical locations and ownership of the Group’s hotels as at December 31, 2008.

	Owned and leased				Managed				Franchised				Total
	Hotels		Rooms		Hotels		Rooms		Hotels		Rooms		Hotels		Rooms
Americas
InterContinental		4		1,914		25		9,156		26		7,432		55		18,502
Crowne Plaza		—		—		18		6,474		169		44,650		187		51,124
Holiday Inn		4		1,358		30		9,777		886		157,642		920		168,777
Holiday Inn Express		—		—		1		252		1,721		145,772		1,722		146,024
Staybridge Suites		2		233		43		5,339		105		10,800		150		16,372
Candlewood Suites		—		—		79		9,512		125		11,129		204		20,641
Hotel Indigo		—		—		3		405		18		2,233		21		2,638
Holiday Inn Club Vacations		—		—		—		—		1		2,412		1		2,412
Total		10		3,505		199		40,915		3,051		382,070		3,260		426,490
EMEA
InterContinental		3		1,293		53		17,297		8		2,246		64		20,836
Crowne Plaza		—		—		24		6,380		65		14,349		89		20,729
Holiday Inn		—		—		86		15,542		246		37,497		332		53,039
Holiday Inn Express		1		153		13		1,491		172		19,920		186		21,564
Staybridge Suites		—		—		2		272		—		—		2		272
Hotel Indigo		—		—		—		—		1		64		1		64
Other		—		—		1		203		—		—		1		203
Total		4		1,446		179		41,185		492		74,076		675		116,707
Asia Pacific
InterContinental		1		495		31		12,523		8		2,380		40		15,398
Crowne Plaza		—		—		61		19,642		5		1,887		66		21,529
Holiday Inn		1		198		85		25,218		15		2,459		101		27,875
Holiday Inn Express		—		—		22		5,931		2		275		24		6,206
Other		—		—		8		2,826		12		2,820		20		5,646
Total		2		693		207		66,140		42		9,821		251		76,654
Total
InterContinental		8		3,702		109		38,976		42		12,058		159		54,736
Crowne Plaza		—		—		103		32,496		239		60,886		342		93,382
Holiday Inn		5		1,556		201		50,537		1,147		197,598		1,353		249,691
Holiday Inn Express		1		153		36		7,674		1,895		165,967		1,932		173,794
Staybridge Suites		2		233		45		5,611		105		10,800		152		16,644
Candlewood Suites		—		—		79		9,512		125		11,129		204		20,641
Hotel Indigo		—		—		3		405		19		2,297		22		2,702
Holiday Inn Club Vacations		—		—		—		—		1		2,412		1		2,412
Other		—		—		9		3,029		12		2,820		21		5,849
Total		16		5,644		585		148,240		3,585		465,967		4,186		619,851

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Americas

In the Americas, the largest proportion of rooms is operated under the franchise business model primarily in the midscale segment (Holiday Inn and Holiday Inn Express). Similarly, in the upscale segment, Crowne Plaza is predominantly franchised, whereas the majority of the InterContinental brand is operated under franchise and management agreements. With 3,260 hotels, the Americas represented 78% of the Group’s hotels and 65% of the Group’s continuing operating profit before central costs and exceptional operating items during the year ended December 31, 2008. The key profit producing region is the United States, although IHG is also represented in each of Latin America, Canada, Mexico and the Caribbean.

EMEA

Comprising 675 hotels at the end of 2008, EMEA represented approximately 25% of the Group’s continuing operating profit before central costs and exceptional operating items during the year ended December 31, 2008. Profits are primarily generated from hotels in the United Kingdom, Continental European gateway cities and the Middle East portfolio.

Asia Pacific

Comprising 251 hotels as at December 31, 2008, Asia Pacific represents approximately 10% of the Group’s operating profit before central costs and exceptional operating items during the year ended December 31, 2008. The Chinese tourism market continues to grow, with the country due to become one of the world’s biggest tourist destinations within 10 years. As at December 31, 2008 the Group had 112 hotels in Greater China and a further 126 hotels in development.

Room Count and Pipeline

During 2008, the IHG Hotels global system (the number of hotels and rooms which are owned, leased, managed or franchised by the Group) increased by 237 hotels (34,757 rooms; 5.9%) to 4,186 hotels (619,851 rooms). Openings of 430 hotels (59,353 rooms) were driven, in particular, by continued expansion in the United States, the United Kingdom, the Middle East and China.

As in recent years, system size growth was driven by brands in the midscale limited service and extended stay segments, with Holiday Inn Express representing over 50% of the total net movement (124 hotels, 17,263 rooms) and, Staybridge Suites and Candlewood Suites combined representing approximately 30% of total net hotel growth. The youngest brand in the IHG portfolio, Hotel Indigo, continues to grow, with 11 hotels (1,201 rooms) added during 2008. In order to expand the Group’s global reach, brands established in the Americas have been launched in other regions, with the opening of Staybridge Suites hotels in Liverpool, England, and Cairo, Egypt, the opening of the Hotel Indigo London Paddington, England, and the signing of a management contract for a Hotel Indigo in Shanghai, China. As a consequence of the continued drive to increase quality through the removal of non-brand conforming hotels, the Holiday Inn hotel and room count showed a net decline (28 hotels, 7,008 rooms). This strategy is further supported by the worldwide brand relaunch of the Holiday Inn brand family, which entails the consistent delivery of best-in-class service and physical quality in all Holiday Inn and Holiday Inn Express hotels. At the year end 274 hotels were open under the updated signage and brand standards.

At the end of 2008, the IHG pipeline totaled 1,775 hotels (245,085 rooms). The IHG pipeline represents hotels and rooms where a contract has been signed and the appropriate fees paid, but are not yet open. Sometimes, a hotel will not open for reasons such as the financing being withdrawn. In the year, room signings across all regions of 98,886 rooms led to pipeline growth of 19,213 rooms. While signings were below the record level of 2007, the level of signings and pipeline growth demonstrates strong demand for the Group’s brands across all regions and represents a key driver of future profitability.

There are no assurances that all of the hotels in the pipeline will open. The construction, conversion and development of hotels is dependent upon a number of factors, including meeting brand standards, obtaining the necessary permits relating to construction and operation, the cost of constructing, converting and equipping such hotels and the ability to obtain suitable financing at acceptable interest rates. The supply of capital for hotel

31

development in the United States and major economies may not continue at previous levels and consequently the system pipeline could decrease.

Americas

The Americas hotel and room count grew by 180 hotels (17,631 rooms) to 3,260 hotels (426,490 rooms). The growth included openings of 332 hotels (38,198 rooms) including Holiday Inn Express openings of 170 hotels (15,547 rooms), representing 51% of all hotel openings in the Americas. A further addition to the system was the new Holiday Inn Club Vacations (one hotel, 2,412 rooms) which gives IHG its first presence in the timeshare market. The franchised business model continues to grow in the region, with franchised hotels contributing over 97% of net growth. Net growth also included removals of 152 hotels (20,567 rooms), with Holiday Inn hotels representing 55% (74% of rooms) of removals as the Group continued its efforts to improve quality and reinvigorate the brand.

The Americas pipeline continued at record growth levels and totaled 1,403 hotels (146,757 rooms) at December 31, 2008. During the year, 60,402 room signings were completed, compared with 75,279 room signings in 2007. Signing levels declined on the record level in 2007 as a result of lower real estate and construction activity amid the current economic outlook. Demand in the key midscale sector remained positive, representing 61% of hotel signings.

EMEA

During 2008, EMEA hotel and room count increased by 24 hotels (7,147 rooms) to 675 hotels (116,707 rooms). The net room growth included the opening of 10,118 rooms (62 hotels), up 27% on 2007 resulting from hotels entering the system after the high signing levels in 2006 and 2007, and the removal of 38 hotels (2,971 rooms), including the removal of a portfolio of franchised Holiday Inn Express hotels in the United Kingdom. System growth was led by openings in the United Kingdom of 21 hotels (2,460 rooms). Further significant growth occurred in the Middle East, with 11 hotel openings (2,767 rooms), compared to four hotel openings (1,013 rooms) in 2007. Holiday Inn Express was the largest contributor of room openings, adding over 36% of the region’s total. Two new brands were introduced to the region during the year with the opening of the Staybridge Suites hotels in Liverpool, England, and Cairo, Egypt, and the Hotel Indigo London Paddington, England, which opened in December 2008.

The pipeline in EMEA decreased by 14 hotels, but increased by 975 rooms, to 173 hotels (33,864 rooms). The growth included 13,348 room signings, with continued strong demand for IHG brands in the Middle East, which accounted for 43% of the region’s room signings. Across the region, all brands recorded positive signing levels, with demand particularly focused in the midscale sector which represented 46% of room signings. The demand for the extended stay brand, Staybridge Suites, continued with signings in line with 2007, reflecting confidence from our owners in the extended stay model imported from the Americas region.

Asia Pacific

Asia Pacific hotel and room count increased by 33 hotels (9,979 rooms) to 251 hotels (76,654 rooms). The net growth included 31 hotels (9,806 rooms) in Greater China reflecting continued expansion in one of IHG’s strategic markets, including the opening of the Group’s 100th hotel in the People’s Republic of China, the Crowne Plaza Beijing Zhongguancun.

The pipeline in Asia Pacific increased by 42 hotels (12,638 rooms) to 199 hotels (64,464 rooms). Pipeline growth was again centered on the Greater China market with 70% of the region’s room signings. There was also significant demand in India, where signings more than doubled compared to 2007. From a brand perspective, Holiday Inn was the largest contributor to signings, with 39% of the region’s room signings.

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FIGURE 4

	Hotels							Rooms
					Change							Change
Global hotel and room count at December 31	2008		2007		over 2007			2008		2007		over 2007
Analyzed by brand:
InterContinental		159		149		10			54,736		50,762		3,974
Crowne Plaza		342		299		43			93,382		83,170		10,212
Holiday Inn		1,353		1,381		(28	)		249,691		256,699		(7,008	)
Holiday Inn Express		1,932		1,808		124			173,794		156,531		17,263
Staybridge Suites		152		122		30			16,644		13,466		3,178
Candlewood Suites		204		158		46			20,641		16,825		3,816
Hotel Indigo		22		11		11			2,702		1,501		1,201
Holiday Inn Club Vacations		1		—		1			2,412		—		2,412
Other		21		21		—			5,849		6,140		(291	)
Total		4,186		3,949		237			619,851		585,094		34,757
Analyzed by ownership type:
Owned and leased		16		18		(2	)		5,644		6,396		(752	)
Managed		585		539		46			148,240		134,883		13,357
Franchised		3,585		3,392		193			465,967		443,815		22,152
Total		4,186		3,949		237			619,851		585,094		34,757

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FIGURE 5

	Hotels						Rooms
					Change						Change
Global pipeline at December 31	2008		2007		over 2007		2008		2007		over 2007
Analyzed by brand:
InterContinental		71		62		9		21,884		20,013		1,871
Crowne Plaza		133		118		15		41,469		36,362		5,107
Holiday Inn		387		365		22		64,261		56,945		7,316
Holiday Inn Express		719		712		7		70,270		70,142		128
Staybridge Suites		166		157		9		18,109		17,150		959
Candlewood Suites		242		207		35		21,790		18,605		3,185
Hotel Indigo		56		52		4		7,212		6,565		647
Other		1		1		—		90		90		—
Total		1,775		1,674		101		245,085		225,872		19,213
Analyzed by ownership type:
Owned and leased		1		—		1		185		—		185
Managed		300		247		53		87,941		71,814		16,127
Franchised		1,474		1,427		47		156,959		154,058		2,901
Total		1,775		1,674		101		245,085		225,872		19,213

Seasonality

Although the performance of individual hotels and geographic markets might be highly seasonal due to a variety of factors such as the tourist trade and local economic conditions, the geographical spread of the Group’s hotels in nearly 100 countries and the relative stability of the income stream from management and franchising activities, diminishes, to some extent, the effect of seasonality on the results of the Group.

Competition

The Group’s hotels compete with a wide range of facilities offering various types of lodging options and related services to the public. The competition includes several large and moderate sized hotel chains offering upper, mid and lower priced accommodation and also includes independent hotels in each of these market segments, particularly outside of North America where the lodging industry is much more fragmented. Major hotel chains which compete with the Group include Marriott International, Inc., Starwood Hotels & Resorts Worldwide, Inc., Choice Hotels International, Inc., Best Western International, Inc., Hilton Hotels Corporation, Wyndham Worldwide, Four Seasons Hotels Inc. and Accor S.A. The Group also competes with non-hotel options, such as timeshare offerings and cruises.

Key Relationships

The Group has major relationships with hotel owners and indirect relationships with suppliers.

The Group maintains effective relationships across all aspects of its operations. The Group’s operations are not dependent upon any single customer, supplier or hotel owner due to the extent of its brands, market segments and geographical coverage. For example, IHG’s largest third-party hotel owner controls less than 4% of the Group’s total room count.

The Group’s relationships with its suppliers will be changing as it places significant emphasis on revised procurement processes during 2009, partly in response to the macroeconomic environment. IHG believes there are significant opportunities for improving effectiveness and efficiency of its buying and sourcing arrangements and will be working with suppliers to realize these benefits.

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To promote effective owner relationships, the Group’s management meets with owners on a regular basis. In addition, IHG has an important relationship with the IAHI — The Owners’ Association (“IAHI”). The IAHI is an independent worldwide association for owners of the Crowne Plaza, Holiday Inn, Holiday Inn Express, Hotel Indigo, Staybridge Suites and Candlewood Suites brands. IHG and the IAHI work together to support and facilitate the continued development of IHG’s brands and systems, with specific emphasis during 2008 on the relaunch of the Holiday Inn and Holiday Inn Express brands and the Group’s response to the economic downturn. Additionally, IHG and the IAHI began working together to develop and facilitate key Corporate Responsibility (“CR”) initiatives within the Group’s brands.

Many jurisdictions and countries regulate the offering of franchise agreements and recent trends indicate an increase in the number of countries adopting franchise legislation. As a significant percentage of the Group’s revenues is derived from franchise fees, the Group’s continued compliance with franchise legislation is important to the successful deployment of the Group’s strategy. This could be either positive in terms of opening up new markets such as China, or negative in terms of increased liability for IHG in franchised properties.

RevPAR

The following tables present RevPAR statistics for the years ended December 31, 2008 and 2007. RevPAR is a key performance indicator which measures underlying hotel revenue with year-on-year performance being measured by the RevPAR movement against the prior year.

Owned and leased, managed and franchised statistics are for comparable hotels, and include only those hotels in the IHG system as of December 31, 2008 and owned and leased, managed or franchised by the Group since January 1, 2007.

35

The comparison with 2007 is at constant US$ exchange rates.

	Owned & leased									Managed									Franchised
							Change vs									Change vs									Change vs
	2008			2007			2007			2008			2007			2007			2008			2007			2007
Americas
InterContinental
Occupancy		80.8	%		80.9	%		(0.1	)%pts		68.6	%		70.8	%		(2.2	)%pts		63.7	%		63.2	%		0.5	%pts
Average daily rate	$	259.21		$	257.53			0.7	%	$	184.03		$	178.18			3.3	%	$	142.98		$	135.40			5.6	%
RevPAR	$	209.35		$	208.42			0.4	%	$	126.18		$	126.18			0.0	%	$	91.14		$	85.56			6.5	%
Crowne Plaza
Occupancy		—			—			—			70.5	%		72.4	%		(1.9	)%pts		60.6	%		63.0	%		(2.4	)%pts
Average daily rate		—			—			—		$	120.31		$	115.52			4.1	%	$	112.07		$	109.15			2.7	%
RevPAR		—			—			—		$	84.86		$	83.58			1.5	%	$	67.96		$	68.76			(1.2	)%
Holiday Inn
Occupancy		70.0	%		72.4	%		(2.4	)%pts		69.4	%		68.3	%		1.1	%pts		60.2	%		63.3	%		(3.1	)%pts
Average daily rate	$	111.00		$	105.01			5.7	%	$	111.34		$	107.42			3.6	%	$	99.79		$	96.84			3.0	%
RevPAR	$	77.71		$	76.02			2.2	%	$	77.28		$	73.34			5.4	%	$	60.07		$	61.26			(1.9	)%
Holiday Inn Express
Occupancy		—			—			—			77.8	%		75.8	%		2.0	%pts		65.3	%		67.9	%		(2.6	)%pts
Average daily rate		—			—			—		$	156.37		$	148.58			5.2	%	$	99.75		$	95.37			4.6	%
RevPAR		—			—			—		$	121.71		$	112.67			8.0	%	$	65.13		$	64.72			0.6	%
Staybridge Suites
Occupancy		72.5	%		73.7	%		(1.2	)%pts		73.7	%		74.2	%		(0.5	)%pts		71.4	%		71.5	%		(0.1	)%pts
Average daily rate	$	103.24		$	100.56			2.7	%	$	112.30		$	109.31			2.7	%	$	103.88		$	101.83			2.0	%
RevPAR	$	74.83		$	74.12			1.0	%	$	82.79		$	81.12			2.1	%	$	74.19		$	72.83			1.9	%
Candlewood Suites
Occupancy		—			—			—			71.4	%		74.4	%		(3.0	)%pts		67.4	%		65.8	%		1.6	%pts
Average daily rate		—			—			—		$	71.80		$	69.94			2.7	%	$	72.77		$	71.83			1.3	%
RevPAR		—			—			—		$	51.24		$	52.01			(1.5	)%	$	49.06		$	47.30			3.7	%
Hotel Indigo
Occupancy		—			—			—			67.5	%		68.4	%		(0.9	)%pts		60.3	%		55.0	%		5.3	%pts
Average daily rate		—			—			—		$	141.66		$	142.78			(0.8	)%	$	110.46		$	106.34			3.9	%
RevPAR		—			—			—		$	95.56		$	97.72			(2.2	)%	$	66.56		$	58.53			13.7	%

	Owned & leased									Managed									Franchised
							Change vs									Change vs									Change vs
	2008			2007			2007			2008			2007			2007			2008			2007			2007
EMEA
InterContinental
Occupancy		74.3	%		81.7	%		(7.4	)%pts		67.7	%		66.9	%		0.8	%pts		60.1	%		63.4	%		(3.3	)%pts
Average daily rate	$	476.45		$	470.48			1.3	%	$	181.90		$	165.51			9.9	%	$	317.57		$	269.56			17.8	%
RevPAR	$	354.22		$	384.37			(7.8	)%	$	123.17		$	110.65			11.3	%	$	190.94		$	170.82			11.8	%
Crown Plaza
Occupancy		—			—			—			78.0	%		79.7	%		(1.7	)%pts		67.5	%		69.2	%		(1.7	)%pts
Average daily rate		—			—			—		$	190.65		$	174.52			9.2	%	$	157.48		$	148.99			5.7	%
RevPAR		—			—			—		$	148.68		$	139.02			6.9	%	$	106.33		$	103.05			3.2	%
Holiday Inn
Occupancy		—			—			—			73.0	%		73.3	%		(0.3	)%pts		65.5	%		67.4	%		(1.9	)%pts
Average daily rate		—			—			—		$	142.96		$	140.23			1.9	%	$	129.65		$	123.82			4.7	%
RevPAR		—			—			—		$	104.37		$	102.79			1.5	%	$	84.89		$	83.45			1.7	%
Holiday Inn Express
Occupancy		68.4	%		72.5	%		(4.1	)%pts		63.4	%		67.3	%		(3.9	)%pts		71.8	%		72.9	%		(1.1	)%pts
Average daily rate	$	102.64		$	85.73			19.7	%	$	100.49		$	90.69			10.8	%	$	116.39		$	112.51			3.4	%
RevPAR	$	70.20		$	62.15			13.0	%	$	63.74		$	61.00			4.5	%	$	83.54		$	82.00			1.9	%

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	Owned & leased									Managed									Franchised
							Change vs									Change vs									Change vs
	2008			2007			2007			2008			2007			2007			2008			2007			2007
Asia Pacific
InterContinental
Occupancy		69.0	%		69.9	%		(0.9	)%pts		71.2	%		74.7	%		(3.5	)%pts		66.0	%		73.2	%		(7.2	)%pts
Average daily rate	$	408.50		$	375.91			8.7	%	$	180.30		$	170.54			5.7	%	$	222.69		$	197.79			12.6	%
RevPAR	$	281.74		$	262.85			7.2	%	$	128.43		$	127.33			0.9	%	$	146.92		$	144.85			1.4	%
Crowne Plaza
Occupancy		—			—			—			70.2	%		73.4	%		(3.2	)%pts		79.8	%		81.2	%		(1.4	)%pts
Average daily rate		—			—			—		$	110.52		$	103.36			6.9	%	$	119.85		$	118.74			0.9	%
RevPAR		—			—			—		$	77.59		$	75.83			2.3	%	$	95.59		$	96.39			(0.8	)%
Holiday Inn
Occupancy		84.3	%		76.7	%		7.6	%		67.4	%		71.3	%		(3.9	)%pts		70.6	%		73.2	%		(2.6	)%pts
Average daily rate	$	138.86		$	135.13			2.8	%	$	93.30		$	84.98			9.8	%	$	86.83		$	79.63			9.0	%
RevPAR	$	117.01		$	103.71			12.8	%	$	62.90		$	60.56			3.9	%	$	61.32		$	58.32			5.1	%
Holiday Inn Express
Occupancy		—			—			—			67.4	%		64.1	%		3.3	%pts		59.8	%		55.4	%		4.4	%pts
Average daily rate		—			—			—		$	60.06		$	58.23			3.1	%	$	56.20		$	54.78			2.6	%
RevPAR		—			—			—		$	40.49		$	37.30			8.6	%	$	33.60		$	30.34			10.7	%
Other
Occupancy		—			—			—			73.0	%		78.9	%		(5.9	)%pts		72.2	%		75.1	%		(2.9	)%pts
Average daily rate		—			—			—		$	123.31		$	127.92			(3.6	)%	$	93.26		$	92.90			0.4	%
RevPAR		—			—			—		$	90.04		$	100.92			(10.8	)%	$	67.29		$	69.73			(3.5	)%

Regulation

Both in the United Kingdom and internationally, the Group’s hotel operations are subject to regulation, including health and safety, zoning and similar land use laws as well as regulations that influence or determine wages, prices, interest rates, construction procedures and costs.

SOFT DRINKS

The Group disposed of its interest in Britvic by way of an IPO in December 2005. The Group received aggregate proceeds of approximately £371 million (including two additional dividends, one of £47 million received in November 2005, and another of £89 million, received in May 2005, before any commissions or expenses).

The Group results for fiscal 2005 include the results of Soft Drinks for the period up until the IPO of Britvic on December 14, 2005.

Britvic generated operating profits before other operating income and expenses of £70 million on revenues of £671 million in the period up to December 14, 2005.

TRADEMARKS

Group companies own a substantial number of service brands and product brands upon which it is dependent and the Group believes that its significant trademarks are protected in all material respects in the markets in which it currently operates.

ORGANIZATIONAL STRUCTURE

Principal operating subsidiary undertakings

InterContinental Hotels Group PLC was the beneficial owner of all (unless specified) of the equity share capital, either itself or through subsidiary undertakings, of the following companies during the year. Unless stated otherwise, the following companies were incorporated in Great Britain, registered in England and Wales and

37

operate principally within the United Kingdom. The companies listed below include those which principally affect the amount of profit and assets of the Group.

Six Continents Limited^a

Hotel Inter-Continental London Limited^a

Six Continents Hotels, Inc.^b

Inter-Continental Hotels Corporation^b

Barclay Operating Corporation^b

InterContinental Hotels Group Resources, Inc.^b

InterContinental Hong Kong Limited^c

Société Nouvelle du Grand Hotel SA^d

(a)	Incorporated in Great Britain and registered in England and Wales.
(b)	Incorporated in the United States.
(c)	Incorporated in Hong Kong.
(d)	Incorporated in France.

38

PROPERTY, PLANT AND EQUIPMENT

Group companies own and lease properties throughout the world, principally hotels but also offices. The table below analyzes the net book value of the Group’s property, plant and equipment (excluding assets classified as held for sale) at December 31, 2008. Approximately 40% of the properties by value were directly owned, with 55% held under leases having a term of 50 years or longer.

	Europe,
	the Middle East
Net book value as at December 31, 2008	and Africa		Americas		Asia Pacific		Total
	($ million)
Land and buildings		532		415		319		1,266
Fixtures, fittings and equipment		171		151		96		418
		703		566		415		1,684

Approximately 90% of the net book value relates to the top five owned and leased hotels (in terms of value) of a total of 16 hotels, including $192 million relating to assets held under finance leases.

At December 31, 2008, an impairment charge of $12 million was recorded in respect of a North American hotel and arises from year-end value in use calculations taking into account the current economic climate.

The net book value includes assets in the course of construction of $41 million and contracts placed for expenditure on property, plant and equipment not included in the financial statements at December 31, 2008 of $40 million.

ENVIRONMENT

IHG understands its responsibility to respect the environment and manage its impact for the benefit of the communities in which it operates, and is committed to taking an active stance on environment and community issues in order to drive increased value for IHG, owners and guests.

As IHG pursues its strategic growth and continues to develop its environmental practice, the Group aims to minimize negative effects on the environment. The Group is committed to providing updated information to stakeholders on:

•  developments in global environmental policy;

•  how it establishes management responsibility and accountability for environmental performance;

•  how it evaluates and manages the Group’s hotels’ environmental footprint;

•  new projects and developments; and

•  performance benchmarking against best practice.

The Group’s immediate priorities for action are environmental management and support for the communities in which it operates. The travel and tourism industry is coming under increasing pressure to address its impact on the environment and society and become more sustainable. Addressing this challenge is a priority.

IHG believes that travel and tourism should be operated responsibly and that the benefits of taking this approach far outweigh the costs. Tourism provides opportunities for local economic development, new business and much needed jobs, especially in developing countries. It also opens the door to improved learning, better communication, greater diversity and richer, more fulfilling social experiences.

The Group accepts that there are actions that hotel operators can take to minimize travel and tourism’s negative effects still further. The following new initiatives were launched in 2008:

•  implementation of systems in all our owned and managed hotels to track the consumption of energy and water as well as waste;

•  development of the Green Engage energy management system (patent pending);

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•  extensive consumer research to quantify ‘green’ opportunity with consumers; and

•  refinement of the Group’s corporate responsibility approach.

Green Engage is an industry-leading educational and measurement system which enables owners, operators and managers to make environmentally friendly and sustainable improvements to the design, construction and operation of their hotels.

IHG will continue to concentrate its efforts on supporting local communities and seek to develop protocols to assess the responsible management of its supply chain.

IHG has developed a more integrated Corporate Responsibility (“CR”) strategy and created a global team, representing all parts of the business, to manage the CR agenda and to develop detailed future plans. In February 2009 a new committee of the IHG Board was established to advise the Board on matters relating to CR.

ITEM 4A.   UNRESOLVED STAFF COMMENTS

None.

ITEM 5.   OPERATING AND FINANCIAL REVIEW AND PROSPECTS

INTRODUCTION

Business and Overview

InterContinental Hotels Group is an international hotel business which owns a portfolio of established and diverse hotel brands, including InterContinental, Crowne Plaza, Holiday Inn, Holiday Inn Express, Staybridge Suites, Candlewood Suites, Hotel Indigo, and the Holiday Inn brand extension, Holiday Inn Club Vacations with 4,186 franchised, managed, owned and leased hotels and 619,851 guest rooms in nearly 100 countries as at December 31, 2008. The Group also manages the hotel loyalty program, Priority Club Rewards.

The Group’s revenue and earnings are derived from hotel operations, which include operation of the Group’s owned hotels, management and other fees paid under management contracts, where the Group operates third-parties’ hotels, and franchise and other fees paid under franchise agreements.

Operational Performance

For the year ended December 31, 2008, the Group reported growth in all regions at the revenue and operating profit lines for continuing operations. The growth in revenues was driven by RevPAR gains in EMEA and Asia Pacific, continued expansion in China and the Middle East and the first full year of trading at the re-opened InterContinental London Park Lane.

The performance of the Group is evaluated primarily on a regional basis. The regional operations are split by business model: franchise agreement, management contract, and owned and leased operations. All three income types are affected by occupancy and room rates achieved by hotels, the ability to manage costs and the change in the number of available rooms through acquisition, development and disposition. Results are also impacted by economic conditions and capacity. The Group’s segmental results are shown before exceptional operating items, interest expense, interest income and income taxes.

The Group believes the period-over-period movement in RevPAR to be a meaningful indicator for the performance of the business.

CRITICAL ACCOUNTING POLICIES

The preparation of the Group’s Consolidated Financial Statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements and the reported amounts of revenues and costs and expense during the reporting periods. On an ongoing basis, management evaluates its estimates and judgments, including those relating to revenue recognition, bad debts, investments, property, plant and equipment, goodwill

40

and intangible assets, income taxes, guest program liability, self insurance claims payable, restructuring costs, retirement benefits and contingencies and litigation.

Management bases its estimates and judgments on historical experience and on other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily available from other sources. Actual results may differ from these estimates under different assumptions and conditions.

The Group’s critical accounting policies are set out below.

Revenue recognition

Revenue is derived from the following sources: owned and leased properties; management fees; franchise fees and other revenues which are ancillary to the Group’s operations, including technology fee income.

Generally, revenue represents sales (excluding VAT and similar taxes) of goods and services, net of discounts, provided in the normal course of business and recognized when services have been rendered. The following is a description of the composition of revenues of the Group.

Owned and leased — primarily derived from hotel operations, including the rental of rooms and food and beverage sales from owned and leased hotels operated under the Group’s brand names. Revenue is recognized when rooms are occupied and food and beverages are sold.

Management fees — earned from hotels managed by the Group, usually under long-term contracts with the hotel owner. Management fees include a base fee, which is generally a percentage of hotel revenue, and an incentive fee, which is generally based on the hotel’s profitability or cash flows. Revenue is recognized when earned and realized or realizable under the terms of the contract.

Franchise fees — received in connection with the license of the Group’s brand names, usually under long-term contracts with the hotel owner. The Group charges franchise royalty fees as a percentage of room revenue. Revenue is recognized when earned and realized or realizable under the terms of the agreement.

The Group participates in three funds established to collect and administer assessments from hotel owners for specific use in marketing, the Priority Club loyalty program and the global reservations system. The Group acts on behalf of hotel owners with regard to the funds and all assessments are designated for specific purposes and result in no profit for the Group. Accordingly, the revenues, expenses and cash flows of the funds are not included in the Consolidated Income Statement or Consolidated Cash Flow Statement.

Goodwill, intangible assets, and property, plant and equipment

Goodwill arising on acquisitions prior to October 1, 1998 was eliminated against equity. From October 1, 1998 to December 31, 2003, acquired goodwill was capitalized and amortized over a period not exceeding 20 years. Since January 1, 2004, goodwill continued to be capitalized but amortization ceased as at that date, replaced by an impairment review on an annual basis or more frequently if there are indicators of impairment. Goodwill is allocated to cash-generating units for impairment testing purposes.

Intangible assets and property, plant and equipment are capitalized and amortized over their expected useful lives, and reviewed for impairment when events or circumstances indicate that the carrying value may not be recoverable. Assets that do not generate independent cash flows are combined into cash-generating units.

The impairment testing of individual assets or cash-generating units requires an assessment of the recoverable amount of the asset or cash-generating unit. If the carrying value of the asset or cash-generating unit exceeds its estimated recoverable amount, the asset or cash-generating unit is written down to its recoverable amount. Recoverable amount is the greater of fair value less cost to sell and value in use. Value in use is assessed based on estimated future cash flows discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. The outcome of such an assessment is subjective, and the result sensitive to the assumed future cashflows to be generated by the assets and

41

discount rates applied in calculating the value in use, both of which will be dependent on the type of asset and its location. Any impairment arising is charged to the income statement.

During 2008, the Group recognized total impairment charges of $96 million across three asset categories as follows:

•  Property, plant and equipment — $12 million in respect of a North American hotel;

•  Goodwill — $63 million relating to the Americas managed operations cash-generating unit; and

•  Intangible assets — $21 million relating to capitalized management contracts in the EMEA region.

Income taxes

The Group provides for deferred tax in accordance with IAS 12 “Income Taxes” in respect of temporary differences between the tax base and carrying value of assets and liabilities including accelerated capital allowances, unrelieved tax losses, unremitted profits from overseas where the Group does not control remittance, gains rolled over into replacement assets, gains on previously revalued properties and other short- term temporary differences. Deferred tax assets are recognized to the extent that it is regarded as probable that the deductible temporary differences can be realized. The Group estimates deferred tax assets and liabilities based on current tax laws and rates, and in certain cases, business plans, including management’s expectations regarding the manner and timing of recovery of the related assets. Changes in these estimates may affect the amount of deferred tax liabilities or the valuation of deferred tax assets.

Accruals for tax contingencies require judgments on the expected outcome of tax exposures which may be subject to significant uncertainty, and therefore the actual results may vary from expectations resulting in adjustments to contingencies and cash tax settlements.

Loyalty program

The hotel loyalty program, Priority Club Rewards enables members to earn points, funded through hotel assessments, during each stay at an InterContinental Hotels Group hotel and redeem the points at a later date for free accommodation or other benefits. The future redemption liability is included in trade and other payables and is estimated using eventual redemption rates determined by actuarial methods and points values. The future redemption liability amounted to $471 million at December 31, 2008.

Pensions and other post-employment benefit plans

Accounting for pensions and other post-employment benefit plans requires the Group to make assumptions including, but not limited to, future asset returns, discount rates, rates of inflation, life expectancies and health care costs. The use of different assumptions, in any of the above calculations, could have a material effect on the accounting values of the relevant assets and liabilities which could result in a material change to the cost of such liabilities as recognized in the income statement over time. These assumptions are subject to periodic review. A sensitivity analysis to changes in various assumptions is included in Note 3 of Notes to the Consolidated Financial Statements.

OPERATING RESULTS

Accounting Principles

The following discussion and analysis is based on the Consolidated Financial Statements of the Group, which are prepared in accordance with IFRS.

For the year ended December 31, 2008 the results include exceptional items totaling a net charge of $85 million (2007 net credit of $152 million, 2006 net credit of $447 million). For comparability of the periods presented, some performance indicators in this Operating and Financial Review and Prospects discussion have been calculated after eliminating these exceptional items. Such indicators are prefixed with “adjusted”. An analysis of exceptional items is included in Note 5 of Notes to the Consolidated Financial Statements.

42

	Year ended			Year ended			Year ended
	December 31,			December 31,			December 31,
	2008			2007			2006
	($ million)
GROUP RESULTS
Revenue:
Continuing operations		1,854			1,771			1,446
Discontinued operations		43			79			319
Total revenue		1,897			1,850			1,765
Operating profit before exceptional operating items:
Continuing operations		535			474			367
Discontinued operations		14			17			57
Total operating profit before exceptional operating items		549			491			424
Exceptional operating items		(132	)		60			48
Operating profit		417			551			472
Net financial expenses		(101	)		(90	)		(20	)
Profit before tax		316			461			452
Tax		(59	)		(30	)		76
Profit after tax		257			431			528
Gain on disposal of assets, net of tax		5			32			226
Profit available for the year		262			463			754
Earnings per ordinary share:
Basic		91.3¢			144.7¢			193.8¢
Adjusted		120.9¢			97.2¢			78.9¢
Adjusted — continuing operations		117.8¢			93.8¢			69.7¢

Year ended December 2008 compared with year ended December 2007

On May 30, 2008, IHG announced its intention to change its reporting currency from sterling to US dollars reflecting the profile of its revenue and operating profit, which are primarily generated in US dollars or US dollar-linked currencies. This change was first introduced in the interim results for the six months to June 30, 2008, and these financial statements are IHG’s first annual financial statements to be presented in US dollars and all comparative information has been restated accordingly.

Revenue from continuing operations increased by 4.7% to $1,854 million and continuing operating profit before exceptional items increased by 12.9% to $535 million during the 12 months ended December 31, 2008.

Included in these results is $33 million of liquidated damages received by the Group in 2008 in respect of the settlement of two management contracts and two franchise contracts, including one portfolio franchise contract. Excluding these, revenue and operating profit before exceptional items from continuing operations increased by 2.8% and 5.9% respectively.

Including discontinued operations, total revenue increased by 2.5% to $1,897 million while operating profit before exceptional items increased by 11.8% to $549 million. Discontinued operations included the results of owned and leased hotels that have been disposed of since January 1, 2007, or those classified as held for sale as part of the asset disposal program that commenced in 2003.

The average US dollar exchange rate to sterling strengthened during 2008 (2008 $1:£0.55, 2007 $1:£0.50). Translated at constant currency, applying 2007 exchange rates, continuing revenue increased by 4.3% and continuing operating profit increased by 10.3%.

43

Exceptional operating items

Exceptional operating costs of $132 million consisted of:

•  $35 million in relation to the Holiday Inn relaunch;

•  $19 million of cost savings-related severance costs;

•  $96 million of non-cash asset impairment reflecting the poorer trading environment expected in 2009; and

•  other items including gains on asset sales, which netted to an $18 million credit

Exceptional operating items are treated as exceptional by reason of their size or nature and are excluded from the calculation of adjusted earnings per share in order to provide a more meaningful comparison of performance.

Net financial expenses

Net financial expenses increased from $90 million in 2007 to $101 million in 2008. Average net debt levels in 2008 were higher than 2007 primarily as a result of the payment of the special dividend of £709 million in June 2007. Net debt levels remained stable in the first half of 2008, reducing slightly in the second half of the year.

Financing costs included $12 million (2007 $21 million) of interest costs associated with Priority Club Rewards where interest is charged on the accumulated balance of cash received in advance of the redemption points awarded. Financing costs in 2008 also included $18 million (2007 $18 million) in respect of the InterContinental Boston finance lease.

Taxation

The effective rate of tax on the combined profit from continuing and discontinued operations, excluding the impact of exceptional items, was 23% (2007 22%). By also excluding the impact of prior year items, which are included wholly within continuing operations, the equivalent tax rate would be 39% (2007 36%). This rate is higher than the UK statutory rate of 28% due mainly to certain overseas profits (particularly in the US) being subject to statutory rates higher than the UK statutory rate, unrelieved foreign taxes and disallowable expenses.

Taxation within exceptional items totaled a credit of $42 million (2007 $60 million) in respect of continuing operations. This represented, primarily, the release of exceptional provisions relating to tax matters which were settled during the year, or in respect of which the statutory limitation period had expired, together with tax relief on exceptional costs.

Net tax paid in 2008 totaled $2 million (2007 $138 million) including $3 million (2007 $64 million) in respect of disposals. Tax paid is lower than the current period income tax charge, primarily due to the receipt of refunds in respect of prior years, together with provisions for tax for which no payment of tax has currently been made.

Earnings per share

Basic earnings per share in 2008 was 91.3 cents, compared with 144.7 cents in 2007. Adjusted earnings per share was 120.9 cents, against 97.2 cents in 2007. Adjusted continuing earnings per share was 117.8 cents up 25.6% from 2007.

44

Highlights for the year ended December 31, 2008

The following is a discussion of the year ended December 31, 2008 compared with the year ended December 31, 2007.

Continuing Hotels Results

	Year ended			Year ended
	December 31,			December 31,
	2008			2007			Change
	($ million)						%
Revenue:
Americas		920			902			2.0
EMEA		518			492			5.3
Asia Pacific		290			260			11.5
Central		126			117			7.7
		1,854			1,771			4.7
Operating profit before exceptional operating items:
Americas		451			440			2.5
EMEA		171			134			27.6
Asia Pacific		68			63			7.9
Central		(155	)		(163	)		4.9
		535			474			12.9

Revenue from continuing operations increased by 4.7% to $1,854 million and continuing operating profit before exceptional items increased by 12.9% to $535 million during the 12 months ended December 31, 2008. The growth in revenues was driven by RevPAR gains in EMEA and Asia Pacific, continued expansion in China and the Middle East and the first full year of trading at the re-opened InterContinental London Park Lane. Growth was achieved in all regions in the first three quarters of the year however, the worldwide financial crisis had a significant impact on results in the final quarter. In the fourth quarter, RevPAR declined sharply across the Group falling by 6.5% globally, although the Group’s brands continued to outperform their segments in all key markets. Strong revenue conversion led to a 2.1 percentage point increase in the continuing operating profit margin to 28.9%.

Americas

Continuing Americas Results

	Year ended			Year ended
	December 31,			December 31,
	2008			2007			Change
	($ million)						%
Revenue:
Owned and leased		257			257			—
Managed		168			156			7.7
Franchised		495			489			1.2
		920			902			2.0
Operating profit before exceptional operating items:
Owned and leased		41			40			2.5
Managed		51			41			24.4
Franchised		426			425			0.2
		518			506			2.4
Regional overheads		(67	)		(66	)		(1.5	)
Total		451			440			2.5

Revenue and operating profit before exceptional items from continuing operations increased by 2.0% to $920 million and 2.5% to $451 million respectively. Including discontinued operations, revenue decreased by 0.1%

45

while operating profit before exceptional items increased by 2.0%. Included in these results is the receipt of $13 million liquidated damages for one management contract.

As a result of sharp falls in occupancy, RevPAR declined across all ownership types in the fourth quarter. In the full year, the region achieved RevPAR growth across the owned and managed estates, however RevPAR declined marginally across the franchised portfolio. In the United States, for comparable hotels, all brands achieved premiums in RevPAR growth relative to their applicable market segment.

Continuing owned and leased revenue remained flat on 2007 at $257 million. Operating profit increased by 2.5% to $41 million. Underlying trading was driven by RevPAR growth of 0.8%, with RevPAR growth in the InterContinental brand of 0.4%. The results were positively impacted by trading at the InterContinental Mark Hopkins, San Francisco, driven by robust RevPAR growth. The InterContinental New York was affected by a downturn in the market as a result of the global financial crisis, adversely impacting revenue and operating profit at the hotel.

Managed revenues increased by 7.7% to $168 million during the year, boosted by the receipt of $13 million in liquidated damages for one hotel that had not commenced trading. Excluding these liquidated damages, managed revenues decreased by 0.6% to $155 million. Growth remained strong in the Latin America region, where rate-led RevPAR growth exceeded 15%. Offsetting this was a fall in revenues from hotels in the US, driven by RevPAR declines in the fourth quarter.

Managed operating profit increased by 24.4% to $51 million. The $10 million increase in profit principally reflects the $13 million receipt of liquidated damages. Excluding this receipt, the managed estate experienced a $3 million fall in operating profit. While the performance in Latin America resulted in growth in operating profit, this was more than offset by a decline in operating profit in the United States due to a fall in occupancy rates, and a small guarantee payment for a newly opened hotel. Additional revenue investment was made to support operational standards in the region. Total operating profit margin in the managed estate increased by 4.1 percentage points to 30.4%.

Results from managed operations include revenues of $88 million (2007 $86 million) and operating profit of $6 million (2007 $6 million) from properties that are structured, for legal reasons, as operating leases but with the same characteristics as management contracts. Excluding the results from these hotels and the $13 million liquidated damages, operating profit margin in the managed estate decreased by 2.2 percentage points to 47.8%.

Franchised revenue and operating profit increased by 1.2% to $495 million and 0.2% to $426 million respectively, compared to 2007. The increase was driven by increased royalty fees as a result of net room count growth of 4.6%. Fees associated with signings and conversions declined as a result of lower real estate activity, due to the adverse impact of the global financial crisis, and lower liquidated damages collected on hotels exiting the system.

Regional overheads were relatively flat on 2007.

46

Europe, Middle East and Africa

Continuing EMEA Results

	Year ended			Year ended
	December 31,			December 31,
	2008			2007			Change
	($ million)						%
Revenue:
Owned and leased		240			244			(1.6	)
Managed		168			167			0.6
Franchised		110			81			35.8
		518			492			5.3
Operating profit before exceptional operating items:
Owned and leased		45			33			36.4
Managed		95			87			9.2
Franchised		75			58			29.3
		215			178			20.8
Regional overheads		(44	)		(44	)		—
Total		171			134			27.6

Revenue and operating profit before exceptional items from continuing operations increased by 5.3% to $518 million and 27.6% to $171 million respectively. Including discontinued operations, revenue increased by 1.8% while operating profit before exceptional items increased by 26.7%. Included in these results were liquidated damages of $9 million relating to one management contract and $7 million for a portfolio of franchised hotels settled during the year.

During the year, the region achieved RevPAR growth of 3.6% driven by gains across all brands operated under managed and franchise contracts. From a regional perspective, RevPAR growth in the Middle East was extremely strong at 20.2%, while smaller growth was experienced in Continental Europe. The region’s continuing operating profit margin increased by 5.8 percentage points to 33.0%. Excluding the two liquidated damages settlements, the margin on continuing operations grew 3.7 percentage points reflecting economies of scale in the managed business and strong revenue conversion at the InterContinental London Park Lane.

In the owned and leased estate, continuing revenue decreased by 1.6% to $240 million as a result of the expiry of a hotel lease in Continental Europe. The InterContinental London Park Lane, which had its first full year of trading since re-opening after refurbishment in 2007, grew strongly in revenues to a market leading position (source: STR). The InterContinental Le Grand Paris experienced tougher trading conditions leading to a RevPAR decline at the hotel. Strong revenue conversion at the InterContinental London Park Lane contributed to the continuing owned and leased operating profit increase of $12 million to $45 million.

EMEA managed revenue increased by 0.6% to $168 million and operating profit increased by 9.2% to $95 million, driven by the receipt of $9 million in liquidated damages relating to the renegotiation of a management contract, which remains in the system. Excluding these liquidated damages, revenue and operating profit declined 4.8% and 1.1% respectively in 2008, as a result of mixed trading conditions in the region. Growth in the Middle East continued through the addition of new rooms and strong RevPAR growth of 20.2%. Offsetting this was a reduced contribution from a portfolio of managed hotels in the United Kingdom. A reduction in the fees associated with signing hotels to the pipeline further impacted the operating profit in the region.

Franchised revenue and operating profit increased by 35.8% to $110 million and 29.3% to $75 million respectively. The growth was principally driven by room count expansion and RevPAR growth in Continental Europe, with Germany and Russia showing RevPAR growth of 3.9% and 8.6% respectively. The region further benefited from the receipt of $7 million of liquidated damages relating to the removal of a portfolio of Holiday Inn Express hotels in the United Kingdom.

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Regional overheads were in line with 2007, with a $2 million increase in costs associated with the new head office offset through further efficiencies in sales and marketing activities.

Asia Pacific

Continuing Asia Pacific Results

	Year ended			Year ended
	December 31,			December 31,
	2008			2007			Change
	($ million)						%
Revenue:
Owned and leased		159			145			9.7
Managed		113			99			14.1
Franchised		18			16			12.5
		290			260			11.5
Operating profit before exceptional operating items:
Owned and leased		43			36			19.4
Managed		55			46			19.6
Franchised		8			6			33.3
		106			88			20.5
Regional overheads		(38	)		(25	)		(52.0	)
Total		68			63			7.9

Asia Pacific revenue and operating profit before exceptional items increased by 11.5% to $290 million and 7.9% to $68 million respectively.

The region achieved strong RevPAR growth across all brands, with the strongest growth in the owned and leased portfolio, and continued its strategic expansion in China. Good profit growth was achieved, although the continuing operating profit margin declined by 0.8 percentage points to 23.4% as a result of further investment to support expansion.

In the owned and leased estate, revenue increased by 9.7% to $159 million as RevPAR growth continued at the InterContinental Hong Kong despite a slowdown during the fourth quarter. The hotel’s revenue growth combined with profit margin gains drove the estate’s operating profit growth of 19.4% to $43 million.

Managed revenue increased by 14.1% to $113 million as a result of the increased room count in Greater China and comparable RevPAR growth of 10.7% in Beijing boosted by the Olympic period. Further strong growth occurred in South East Asia with RevPAR growth of 9.9% in the region, and the joint venture with All Nippon Airways (“ANA”) further increased revenues. Operating profit increased by 19.6% to $55 million as revenue gains were partially offset by continued infrastructure investment in China and Southern Asia.

Franchised revenues increased from $16 million to $18 million driven by the receipt of $4 million of liquidated damages relating to the settlement of one franchise contract in the region. Excluding this receipt, operating profit declined by $2 million, primarily as a result of reduced fee income in India due to the removal of non-brand compliant hotels.

After a further $5 million of the previously announced $10 million investment to support the launch of the ANA Crowne Plaza brand in Japan and the non-recurrence of a $2 million favourable legal settlement in 2007, Asia Pacific regional overheads increased by $6 million to support the rapid growth in the region.

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Central

	Year ended			Year ended
	December 31,			December 31,
	2008			2007			Change
	($ million)						%
Revenue		126			117			7.7
Gross central costs		(281	)		(280	)		(0.4	)
Net central costs		(155	)		(163	)		4.9

During 2008, net central costs reduced by 4.9% from $163 million to $155 million due to the receipt of a favourable $3 million insurance settlement and the impact of weaker sterling.

System Funds

	Year ended		Year ended
	December 31,		December 31,
	2008		2007		Change
	($ million)				%
Assessments		990		930		6.5

Hotels operated under the Group’s brands are, pursuant to terms within their contracts, subject to cash assessments for brand marketing, reservations systems and Priority Club membership stays. These assessments, typically based upon room revenue, are pooled within the system funds for the collective benefit of all hotels by brand or geography. The assessments are used for revenue generating activities including the costs of call centers, frequency program points, websites, sales teams, advertising and brand development and affiliate marketing programs.

The Group acts on behalf of hotel owners with regard to the funds and all assessments are designated for specific purposes and result in no profit for the Group. Accordingly, the revenues, expenses and cash flows of the funds are not included in the Consolidated income statement or Consolidated cash flow statement. The funds are planned to operate at break even with any short-term timing surplus or deficit carried on IHG’s balance sheet within working capital. The Owner’s Association, the IAHI, endorses the budgeted spend of the funds and provides a governance overview of the operation of the funds.

In the year to December 31, 2008, system fund assessments increased by 6.5% to $990 million primarily as a result of the growth in system size and affiliate marketing programs.

Highlights for the year ended December 31, 2007

The following is a discussion of the year ended December 31, 2007 compared with the year ended December 31, 2006.

Group results

Revenue from continuing operations increased by 22.5% to $1,771 million and continuing operating profit increased by 29.2% to $474 million during the year ended December 31, 2007. The growth was driven by strong underlying RevPAR gains across all regions, hotel expansion in key markets and profit uplift from owned and leased assets. Furthermore, strong revenue conversion led to a 1.4 percentage point increase in continuing operating profit margins to 26.8%.

Americas

Revenue and operating profit from continuing operations increased by 15.9% to $902 million and 11.4% to $440 million respectively.

The region achieved healthy RevPAR growth across all ownership types and RevPAR premiums to the US market segments for hotels operating under the InterContinental, Crowne Plaza, Holiday Inn and Holiday Inn

49

Express brands. During the fourth quarter, consistent with the US market, the region was impacted by a marginal softening in RevPAR growth due to a slight decline in occupancy levels.

Continuing owned and leased revenue increased by 33.9% to $257 million and operating profit increased by 81.8% to $40 million. Positive underlying trading was driven by RevPAR growth of 9.7%, led by the InterContinental brand with growth of 10.6%. The results were favorably impacted by trading performance at the InterContinental Boston which became fully operational during the first half of the year (year-on-year profit increase of $11 million) and trading at the InterContinental New York where robust market conditions lifted average occupancy levels to over 90%.

Managed revenues increased by 9.1% to $156 million during the year, driven by strong RevPAR growth, particularly in Latin America where rate-led RevPAR growth exceeded 20%. Robust brand performance resulted in RevPAR growth premiums, compared to respective US market segments, for InterContinental, Crowne Plaza and Holiday Inn. Growth in the extended stay segment was impacted by an increase in market supply. Managed revenues included $86 million (2006 $80 million) from properties that are structured, for legal reasons, as operating leases but with the same characteristics as management contracts.

Managed operating profit decreased by 18.0% to $41 million, including $6 million (2006 $9 million) from managed properties held as operating leases. The decline in profit principally reflects increased revenue investment to support growth in contract signings, the impact of fewer hotels under management contracts following the restructuring of the FelCor agreement in 2006, foreign exchange losses in Latin America and lower ancillary revenues together with higher costs at one of the hotels held as an operating lease. These items reduced operating profit margins in the managed estate by 8.7 percentage points to 26.3% and reduced continuing operating profit margins in the region by 2.0 percentage points to 48.8%.

Franchised revenue and operating profit increased by 10.4% to $489 million and 11.3% to $425 million respectively, compared to 2006. The increase was driven by RevPAR growth of 5.8%, net room count growth of 4.0% and fees associated with growth in signings.

Regional overheads were affected positively in 2006 by lower claims in the Group-funded employee healthcare program. Excluding this, regional overheads were in line with the prior period.

Europe, Middle East and Africa

Revenue and operating profit from continuing operations increased by 35.5% to $492 million and 94.2% to $134 million, respectively.

During the year, the region achieved RevPAR growth of 8.6% driven by substantial gains across all brands and ownership types. From a regional perspective, RevPAR levels benefited from the positive market conditions in the Middle East, France and the United Kingdom. The region’s continuing operating profit margins increased by 8.2 percentage points to 27.2% as a result of improved revenue conversion in the owned and leased portfolio and increased scalability in the franchised operations.

In the owned and leased estate, continuing revenue increased by 44.4% to $244 million as a result of trading at the InterContinental London Park Lane which became fully operational during the first half of 2007, together with strong rate-led RevPAR growth at the InterContinental Paris Le Grand. Effective revenue conversion led to an increase in continuing operating profit of $40 million to $33 million, including operating profit growth of $27 million at the InterContinental London Park Lane.

EMEA managed revenues increased by 27.5% to $167 million and operating profit increased by 27.9% to $87 million. The growth was driven by management contracts negotiated in 2006 as part of the hotel disposal program in Europe and strong underlying trading in markets such as the Middle East, the United Kingdom, Spain and Russia.

Franchised revenue and operating profit increased by 28.6% to $81 million and 31.8% to $58 million respectively. The growth was principally driven by RevPAR gains and room count expansion in the United Kingdom and Continental Europe.

50

Asia Pacific

Asia Pacific revenue increased by 27.5% to $260 million whilst operating profit increased by 21.2% to $63 million.

The region achieved strong RevPAR growth across all brands and ownership types and continued its strategic expansion in China and Japan. Strong growth in total profit was achieved; however, revenue conversion was impacted by continued investment to support expansion, resulting in a 1.3 percentage point reduction in operating profit margins to 24.2%.

In the owned and leased estate, revenue increased by 10.7% to $145 million due to the combined impact of strong room and food and beverage trading at the InterContinental Hong Kong, despite the impact of renovation works throughout a significant part of the year. The hotel’s revenue growth combined with profit margin gains drove the estate’s operating profit growth of 16.1% to $36 million.

Managed revenues increased by 52.3% to $99 million as a result of the full year contribution from the hotels which joined the system in 2006 as part of the IHG ANA joint venture in Japan, continued organic expansion in China and solid RevPAR growth across Southern Asia and Australia. Operating profit increased by 17.9% to $46 million as revenue gains were offset by integration and ongoing costs associated with the ANA joint venture and continued infrastructure investment in China.

Franchised revenues doubled from $8 million to $16 million, primarily driven by hotels in the IHG ANA joint venture. Similar to the managed operations, growth in profitability was impacted by ANA integration and ongoing costs.

Regional overheads increased by $2 million to $25 million primarily as a result of investments in technology and corporate infrastructure in China and Japan and included the favourable impact of a legal settlement.

Central

During 2007, net central costs increased by $14 million to $163 million.

LIQUIDITY AND CAPITAL RESOURCES

Sources of Liquidity

The Group is financed by a $2.1 billion Syndicated Facility of which $0.5 billion expires in November 2010 and $1.6 billion expires in May 2013. Short-term borrowing requirements are met from drawings under bilateral bank facilities.

At December 31, 2008, gross debt was $1,355 million. The currency denomination of gross debt, after derivative transactions, was $152 million of sterling denominated borrowings, $224 million of euro denominated borrowings, $889 million of US dollar denominated borrowings and $90 million of borrowings denominated in other currencies mainly Hong Kong dollars.

At December 31, 2008, committed bank facilities amounted to $2,107 million of which $946 million were unutilized. Uncommitted facilities totaled $25 million. In the Group’s opinion, the available facilities are sufficient for the Group’s present requirements.

The Group also held short-term deposits and investments at December 31, 2008 amounting to $82 million. Credit risk on treasury transactions is minimized by operating a policy on investment of surplus funds that generally restricts counterparties to those with an A credit rating or better or those providing adequate security. Limits are also set on the amounts invested with individual counterparties. Notwithstanding that counterparties must have an A credit rating or better, during periods of significant financial market turmoil, counterparty exposure limits are significantly reduced and counterparty credit exposure reviews are broadened to include the relative placing of credit default swap pricings. Most of the Group’s surplus funds are held in the United Kingdom or United States and there are no material funds where repatriation is restricted as a result of foreign exchange regulations.

The Group is in compliance with all of the financial covenants in its loan documents, none of which is expected to present a material restriction on funding in the near future.

Details of exchange and interest rate risk and financial instruments are disclosed in “Item 11. Quantitative and Qualitative Disclosures about Market Risk”.

51

Cash From Operating Activities

Net cash from operating activities totaled $641 million for the year ended December 31, 2008 (2007 $465 million).

Cash flow from operating activities is the principal source of cash used to fund the ongoing operating expenses, interest payments, maintenance capital expenditure and dividend payments of the Group. The Group believes that the requirements of its existing business and future investment can be met from cash generated internally, disposition of assets and businesses and external finance expected to be available to it.

Cash From Investing Activities

Net cash outflows from investing activities totaled $25 million (2007 $39 million) comprising proceeds (net of tax paid) from the disposal of hotels and investments of $83 million (2007 $147 million) and capital expenditure of $108 million (2007 $186 million).

Cash Used in Financing Activities

Net cash used in financing activities totaled $591 million (2007 $663 million). Cash outflows associated with shareholder returns in 2008 totaled $257 million and included $139 million of share repurchases. Borrowings decreased by $316 million.

As of December 31, 2008, the Group had committed contractual capital expenditure of $40 million. Contracts for expenditure on fixed assets are not authorized by the directors on an annual basis, as divisional capital expenditure is controlled by cash flow budgets. Authorization of major projects occurs shortly before contracts are placed.

Off-Balance Sheet Arrangements

As at December 31, 2008, the Group had no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Group’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Contractual Obligations

The Group had the following contractual obligations outstanding as of December 31, 2008:

	Total amounts		Less than						After
	committed		1 year		1-3 Years		3-5 years		5 years
	($ million)
Long-term debt(i)		1,153		5		502		646		—
Finance lease obligations(ii)		3,460		16		32		32		3,380
Operating lease obligations		548		56		97		73		322
Agreed pension scheme contributions		28		28		—		—		—
Capital contracts placed		40		40		—		—		—
		5,229		145		631		751		3,702

(i)	Repayment period classified according to the related facility maturity date.
(ii)	Represents the minimum lease payments related to the 99 year lease on the InterContinental Boston.

In limited cases, the Group may provide performance guarantees to third-party owners to secure management contracts. The maximum exposure under such guarantees was $249 million at December 31, 2008 (2007 $243 million). It is the view of the Directors that, other than to the extent that liabilities have been provided for in the Consolidated Financial Statements, such guarantees are not expected to result in material financial loss to the Group.

As of December 31, 2008, the Group had outstanding letters of credit of $42 million (2007 $62 million) mainly relating to self-insurance programs.

52

The Group may guarantee loans made to facilitate third-party ownership of hotels in which the Group has an equity interest and also a management contract. As of December 31, 2008, the Group was a guarantor of loans which could amount to a maximum exposure of $46 million (2007 $49 million).

The Group has given warranties in respect of the disposal of certain of its former subsidiaries and hotels. It is the view of the Directors that, other than to the extent that liabilities have been provided for in the Consolidated Financial Statements, such warranties are not expected to result in material financial loss to the Group.

Pension Plan Commitments

The Group operates the following material defined benefits plans: the InterContinental Hotels UK Pension Plan and, in the United States, the InterContinental Hotels Pension Plan and the InterContinental Hotels non-qualified plans.

The InterContinental Hotels UK Pension Plan was established with effect from April 1, 2003. On an IAS 19 “Employee Benefits” basis, at December 31, 2008 the Plan had a surplus of $37 million. The defined benefits section of this Plan is generally closed to new members. In addition, there are unfunded UK pension arrangements for certain members affected by the lifetime allowance; at December 31, 2008, these arrangements had an IAS 19 deficit of $34 million. In 2009, the Group expects to make regular contributions to the UK pension plan of £6 million. In addition, the Group funded the payment of enhanced transfer values to certain deferred members at a cost of £10 million on January 23, 2009.

The US-based plans are closed to new members and pensionable service no longer accrues for current employee members. On an IAS 19 basis, at December 31, 2008 the plans had a combined deficit of $75 million. In 2009, the Group expects to make regular contributions to these plans of $4 million.

The Group is exposed to the funding risks in relation to the defined benefit sections of the InterContinental Hotels UK Pension Plan and the US-based InterContinental Hotels Pension Plan, as explained in “Item 3. Key Information — Risk Factors”.

ITEM 6.   DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

DIRECTORS AND SENIOR MANAGEMENT

Overall strategic direction of the Group is provided by the board of directors, comprising executive and non-executive directors, and by members of the executive committee.

The directors and officers of InterContinental Hotels Group PLC as at March 23, 2009 are:

Directors

		Initially		Date of next
		appointed to		reappointment
Name	Title	the board		by shareholders(4)
Andrew Cosslett	Director and Chief Executive		2005		2011
David Kappler(1)	Director and Senior Independent Director		2004		2011
Ralph Kugler(1)	Director		2003		2011
Jennifer Laing(1)(2)	Director		2005		2009
Jonathan Linen(1)(2)	Director		2005		2009
Richard Solomons(3)	Director and Finance Director		2003		2009
David Webster	Director and Chairman		2003		2010
Ying Yeh(1)(4)	Director		2007		2011

(1)	Non-executive independent director.
(2)	Required, under the Company’s Articles of Association, to stand for re-election at the 2009 Annual General Meeting.
(3)	Standing for re-election at the 2009 Annual General Meeting on a voluntary basis.
(4)	Under the Company’s Articles of Association.

53

Officers

		Initially appointed
Name	Title	to position
Jim Abrahamson	President, The Americas		2009
Tom Conophy	Executive Vice President and Chief Information Officer		2006
Peter Gowers	President, Asia Pacific		2007
Kirk Kinsell	President, EMEA		2007
Tracy Robbins	Executive Vice President, Global Human Resources		2005
Tom Seddon	Executive Vice President and Chief Marketing Officer		2007
George Turner	Executive Vice President, General Counsel and Company Secretary		2009

Former Directors and Officers

Robert C Larson served as a Non-Executive Director from 2003 until December 2008. Sir David Prosser served a Non-Executive Director from 2003 until May 2008. Stevan Porter served as a Director and President, The Americas from 2003 until August 2008. Richard Winter, a senior employee of the Company, served as Executive Vice President, Corporate Services, General Counsel and Company Secretary from 2003 until December 2008.

Directors and Officers

David Webster, Non-Executive Chairman

Appointed Deputy Chairman and Senior Independent Director of InterContinental Hotels Group on the separation of Six Continents PLC in April 2003. Appointed Non-Executive Chairman on January 1, 2004. Also Non-Executive Chairman of Makinson Cowell Limited, a capital markets advisory firm, and a member of the Appeals Committee of the Panel on Takeovers and Mergers and a Director of Temple Bar Investment Trust PLC. Formerly Chairman of Safeway plc and a Non-Executive Director of Reed Elsevier PLC. Chairman of the Nomination Committee. Age 64.

Andrew Cosslett, Chief Executive

Appointed Chief Executive in February 2005, joining the Group from Cadbury Schweppes plc where he was most recently President, Europe, Middle East & Africa. During his career at Cadbury Schweppes he held a variety of senior regional management and marketing roles in the UK and Asia Pacific. Also has over 11 years’ experience in brand marketing with Unilever. A member of the Executive Committee of the World Travel and Tourism Council and a member of the President’s Committee of the CBI. Age 53.

Richard Solomons, Finance Director

Qualified as a chartered accountant in 1985, followed by seven years in investment banking, based in London and New York. Joined the Group in 1992 and held a variety of senior finance and operational roles. Appointed Finance Director of the Hotels business in October 2002 in anticipation of the separation of Six Continents PLC in April 2003. Assumed the role of interim President of the Americas region from July 2008, following the illness and subsequent untimely death of Stevan Porter, until the appointment of Jim Abrahamson in January 2009. Responsible for corporate and regional finance, Group financial control, strategy, investor relations, tax, treasury and internal audit. Age 47.

David Kappler, Senior Independent Non-Executive Director

Appointed a Director and Senior Independent Director in June 2004. Non-Executive Chairman of Premier Foods plc and a Non-Executive Director of Shire plc. A qualified accountant and formerly Chief Financial Officer

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of Cadbury Schweppes plc until April 2004. Also served as a Non-Executive Director of Camelot Group plc and of HMV Group plc. Chairman of the Audit Committee. Age 61.

Ralph Kugler, Non-Executive Director

Appointed a Director in April 2003, was President, Unilever Home and Personal Care, and served on the boards of Unilever PLC and Unilever NV until May 2008. Held a variety of senior positions globally for Unilever and has experience of regional management in Asia, Latin America and Europe, with over 25 years’ experience of general management and brand marketing. Chairman of the Remuneration Committee. Age 53.

Jennifer Laing, Non-Executive Director

Appointed a Director in August 2005, she was Associate Dean, External Relations at London Business School, until 2007. A fellow of the Marketing Society and of the Institute of Practitioners in Advertising, she has over 30 years’ experience in advertising including 16 years with Saatchi & Saatchi, to whom she sold her own agency. Also serves as a Non-Executive Director of Hudson Highland Group Inc., a US human resources company. Age 62.

Jonathan Linen, Non-Executive Director

Appointed a Director in December 2005, he was formerly Vice Chairman of the American Express Company, having held a range of senior positions throughout his career of over 35 years with American Express. Also serves as a Non-Executive Director of Yum! Brands, Inc. and of Modern Bank N.A., a US private banking company. He also serves on a number of US Councils and advisory boards. Age 65.

Ying Yeh, Non-Executive Director

Appointed a Director in December 2007, she is Chairman and President, North Asia Region, President, Business Development, Asia Pacific Region and Vice President, Eastman Kodak Company. Also a Non-Executive Director of AB Volvo. Prior to joining Kodak in 1997 she was, for 15 years, a diplomat with the US Foreign Service in Hong Kong and Beijing. Age 60.

Other members of the Executive Committee

Jim Abrahamson, President, The Americas

Has over 30 years’ experience in hotel operations, branding, development and franchise relations. Joined the Group in January 2009 from Global Hyatt Corporation, where he served as Head of Development, the Americas, with responsibility for development of all the Hyatt brands in the region, and playing a key part in Global Hyatt’s entry into new markets and segments. Previously senior Vice President, Hilton Hotels Corporation for 12 years. Responsible for the business development and performance of all the hotel brands and properties in the Americas’ region. Age 53.

Tom Conophy, Executive Vice President and Chief Information Officer

Has over 27 years’ experience in the IT industry, including management and development of new technology solutions within the travel and hospitality business. Joined the Group in February 2006 from Starwood Hotels & Resorts International where he held the position of Executive Vice President & Chief Technology Officer. Responsible for global technology, including IT systems and information management throughout the Group. Age 48.

Peter Gowers, President, Asia Pacific

Joined the Group in 1999. Following appointments as Executive Vice President, Global Brand Services in 2003, and as Chief Marketing Officer in 2005, he was appointed President, Asia Pacific in November 2007. Now has responsibility for the business development and performance of all the hotel brands and properties in the Asia Pacific region. Has previous international experience in management consultancy, based in London and Singapore. Age 36.

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Kirk Kinsell, President, EMEA

Has over 26 years’ experience in the hospitality industry, including senior franchise positions with Holiday Inn Corporation and ITT Sheraton, prior to joining the Group in 2002 as Senior Vice President, Chief Development Officer for the Americas region. Became President, EMEA in September 2007. Responsible for the business development and performance of all the hotel brands and properties in the EMEA region. Age 54.

Tracy Robbins, Executive Vice President, Global Human Resources

Has over 23 years’ experience in line and HR roles in service industries. Joined the Group in December 2005 from Compass Group PLC, a world leading food service company, where she was Group Human Resources Leadership & Development Director. Previously Group HR Director for Forte Hotels Group. Responsible for global talent management and leadership development, reward strategy and implementation. Age 45.

Tom Seddon, Executive Vice President and Chief Marketing Officer

Has over 16 years’ experience in sales and marketing in the hospitality industry, including with IHG’s predecessor parent companies from 1994 to 2004. Rejoined the Group in November 2007, from restaurant business SUBWAY^® where he was responsible for worldwide sales and marketing activities. Has responsibility for worldwide brand management; reservations, e-commerce, global sales, relationship and distribution marketing and loyalty programs and corporate responsibility. Age 40.

George Turner, Executive Vice President, General Counsel and Company Secretary

Solicitor, qualified to private practice in 1995, and has 12 years’ corporate and commercial law experience with Imperial Chemical Industries PLC, where he was most recently Deputy Company Secretary. Joined the Group in September 2008, and became Executive Vice President, General Counsel and Company Secretary on January 1, 2009. Responsible for corporate governance, risk management, insurance, data privacy, company secretariat and the global and regional legal teams. Age 38.

There are no family relationships between any of the persons named above.

There are no arrangements or understandings with major shareholders, customers, suppliers or others, pursuant to which any person named above was selected as a director or member of senior management.

COMPENSATION

In fiscal 2008, the aggregate compensation (including pension contributions, bonus and awards under the long term incentive plans) of the directors and officers of the Company was $31.9 million. The aggregate amount set aside or accrued by the Company in fiscal 2008 to provide pension retirement or similar benefits for those individuals was $0.9 million. An amount of $12.8 million was charged in fiscal 2008 in respect of bonuses payable to them under performance related cash bonus schemes and long term incentive plans.

Note 3 of Notes to the Financial Statements sets out the individual compensation of the directors. The following are details of the Company’s principal share schemes, in which the directors of the Company participated during the period.

Share Plans

Under the terms of the Separation, holders of options under the Six Continents Executive Share Option Schemes were given the opportunity to exchange their Six Continents options for equivalent value new options over IHG PLC shares. At December 31, 2008 there were 2,424,605 such options outstanding.

Annual Bonus Plan

The IHG Annual Bonus Plan (ABP), enables eligible employees, including Executive Directors, to receive all or part of their bonus in the form of shares together with, in certain cases, a matching award of free shares up to half the deferred amount. The bonus and matching shares in the 2004 and 2005 plans were deferred and released in three

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equal tranches on the first, second and third anniversaries of the award date. The bonus and matching shares in the 2006 and 2007 plans will be released on the third anniversary of the award date. Under the 2006 and 2007 plans a percentage of the award (Board members — 100% (2006 80%); other eligible employees — 50%) had to be taken in shares and deferred. Under the 2008 plan, half of any bonus earned is deferred in the form of shares for three years. No matching shares are awarded by the Company.

Participants may defer the remaining amount on the same terms or take it in cash. The awards in all of the plans are conditional on the participants remaining in the employment of a participating company. Participation in the ABP is at the discretion of the Remuneration Committee. The number of shares is calculated by dividing a specific percentage of the participant’s annual performance related bonus by the middle market quoted prices on the three consecutive dealing days immediately preceding the date of grant. A number of executives participated in the plan during the year and conditional rights over 661,657 shares were awarded to participants.

Long Term Incentive Plan

The Long Term Incentive Plan (LTIP) allows Executive Directors and eligible employees to receive share awards, subject to the satisfaction of a performance condition, set by the Remuneration Committee, which is normally measured over a three year period. Awards are normally made annually and, except in exceptional circumstances, will not exceed three times salary for Executive Directors and four times salary in the case of other eligible employees. During the year, conditional rights over 5,060,509 shares were awarded to employees under the plan. The plan provides for the grant of ‘nil cost options’ to participate as an alternative to conditional share awards.

Executive Share Option Plan

For options granted, the option price is not less than the market value of an ordinary share, or the nominal value if higher. The market value is the quoted price on the business day preceding the date of grant, or the average of the middle market quoted prices on the three consecutive dealing days immediately preceding the date of the grant. A performance condition has to be met before options can be exercised. The performance condition is set by the Remuneration Committee. The plan was not operated during 2008 and no options were granted in the year under the plan. The latest date that any options may be exercised is April 2015.

Sharesave Plan

The Sharesave Plan is a savings plan whereby employees contract to save a fixed amount each month with a savings institution for three or five years. At the end of the savings term, employees are given the option to purchase shares at a price set before savings began. The Sharesave Plan is available to all UK employees (including Executive Directors) employed by participating Group companies provided that they have been employed for at least one year. The plan provides for the grant of options to subscribe for ordinary shares at the higher of nominal value and not less than 80% of the middle market quotations of the ordinary shares on the three dealing days immediately preceding the invitation date. The plan was not operated during 2008 and no options were granted in the year under the plan. The latest date that any options may be exercised under the five-year plan is February 28, 2010.

Options and Ordinary Shares held by Directors

Details of the directors’ interests in the Company’s shares are set out on page 61 and pages F-37 to F-39.

BOARD PRACTICES

Contracts of Service

The Remuneration Committee’s policy is for Executive Directors to have rolling contracts with a notice period of 12 months.

Andrew Cosslett and Richard Solomons have service agreements with a notice period of 12 months. All new appointments are intended to have 12-month notice periods. However, on occasion, to complete an external recruitment successfully, a longer initial period reducing to 12 months may be used.

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David Webster’s appointment as non-executive Chairman, effective from January 1, 2004, is subject to six months’ notice.

Non-executive directors, Ralph Kugler, Robert C Larson and Sir David Prosser signed letters of appointment effective from the listing of IHG in April 2003. These were renewed, effective from completion of the capital reorganization of the Company and the listing of new IHG shares on June 27, 2005. David Kappler signed a letter of appointment effective from his date of original appointment to the Board on June 21, 2004. This was also renewed, effective from June 27, 2005. Jennifer Laing and Jonathan Linen signed letters of appointment effective from their appointment dates, respectively August 25, 2005 and December 1, 2005. Ying Yeh signed a letter of appointment effective from her appointment date of December 1, 2007.

Directors’ Contracts

	Contract		Unexpired term/
Directors	date		notice period
Andrew Cosslett		2.3.05		12 months
Stevan Porter		4.15.03		n/a	(1)
Richard Solomons		4.15.03		12 months

(1) Stevan Porter passed away on August 7, 2008.

Each of the Executive Directors signed a letter of appointment, effective from completion of the capital reorganization of the Company and the listing of new IHG shares on June 27, 2005. The terms of each appointment were as set out in each executive director’s original service agreement.

See Note 3 of the Notes to the Consolidated Financial Statements for details of directors’ service contracts.

Payments on Termination

No provisions for compensation for termination following change of control, or for liquidated damages of any kind, are included in the current directors’ contracts. In the event of any early termination of an executive director’s contract the policy is to seek to minimize any liability.

Upon retirement, and under certain other specified circumstances on termination of his employment, a director will become eligible to receive benefit from his participation in a Company pension plan. See Note 3 of Notes to the Financial Statements for details of directors’ pension entitlements at December 31, 2008.

Committees

Each Committee of the Board has written terms of reference which have been approved by the Board and which are subject to review each year.

Executive Committee

The Executive Committee is chaired by the Chief Executive. It consists of the executive directors and senior executives from the Group and the regions and usually meets monthly. Its role is to consider and manage a range of important strategic and business issues facing the Group. It is responsible for monitoring the performance of the business. It is authorized to approve capital and revenue investment within levels agreed by the Board. It reviews and recommends to the Board the most significant investment proposals.

Audit Committee

The Audit Committee is chaired by David Kappler who has significant recent and relevant financial experience and is the Committee’s financial expert. During 2008, the other Audit Committee members were Sir David Prosser (until his retirement on May 31, 2008), Ralph Kugler and Jennifer Laing. All Audit Committee members are independent. The Audit Committee is scheduled to meet at least four times a year and met five times in 2008.

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The Audit Committee’s principal responsibilities are to:

•  review the Group’s public statements on internal control and corporate governance compliance prior to their consideration by the Board;

•  review the Group’s processes for detecting and addressing fraud, misconduct and control weaknesses and to consider the response to any such occurrence, including overseeing the process enabling the anonymous submission of concerns;

•  review reports from management, internal audit and external audit concerning the effectiveness of internal control, financial reporting and risk management processes;

•  review with management and the external auditor any financial statements required under UK or US legislation before submission to the Board;

•  establish, review and maintain the role and effectiveness of the internal audit function, including overseeing the appointment of the Head of Internal Audit;

•  assume responsibility for the appointment, compensation, resignation, dismissal and the overseeing of the external auditor, including review of the external audit, its cost and effectiveness;

•  pre-approve non-audit work to be carried out by the external auditor and the fees to be paid for that work along with the monitoring of the external auditor’s independence; and

•  oversee the Group’s Code of Ethics and Business Conduct and associated procedures for monitoring adherence.

The Audit Committee discharges its responsibilities through a series of Committee meetings during the year at which detailed reports are presented for review. The Audit Committee commissions reports, either from external advisers, the Head of Internal Audit, or Group management, after consideration of the major risks to the Group or in response to developing issues. The Finance Director attends its meetings as do the external auditor and the Head of Internal Audit, both of whom have the opportunity to meet privately with the Audit Committee, in the absence of Group management, at the conclusion of each meeting.

All proposals for the provision of non-audit services by the external auditor are pre-approved by the Audit Committee or its delegated member, the overriding consideration being to ensure that the provision of non-audit services does not impact the external auditors independence and objectivity.

Remuneration Committee

The Remuneration Committee, chaired by Sir David Prosser, until his retirement on May 31, 2008 and thereafter by Ralph Kugler, also comprises the following Non-Executive, directors: David Kappler, Robert C Larson (until his retirement on December 31, 2008), Jonathan Linen and Ying Yeh. It meets at least three times a year and met four times in 2008. The Remuneration Committee advises the Board on overall remuneration policy. The Remuneration Committee also determines, on behalf of the Board, and with the benefit of advice from external consultants and members of the Human Resources department, the remuneration packages of the executive directors and other members of the Executive Committee. No member of the Remuneration Committee has any personal financial interest, other than as a shareholder, in the matters to be decided by the Remuneration Committee.

Nomination Committee

The Nomination Committee comprises any three Non-Executive Directors although, where possible, all Non-Executive Directors are present. It is chaired by the Chairman of the Company. Its terms of reference reflect the principal duties proposed as good practice and referred to in the Combined Code. The Committee nominates, for approval by the Board, candidates for appointment to the Board. The Nomination Committee generally engages external consultants to advise on candidates for Board appointments. Candidate profiles and objective selection criteria are prepared in advance of any engagements. The Nomination Committee also has responsibility for succession planning and assists in identifying and developing the role of the Senior Independent Director. The Nomination Committee met five times during the year.

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Corporate Responsibility Committee

In December 2008 it was proposed to establish an additional Committee of the Board, to advise on matters relating to the important area of corporate responsibility. This new Committee was established in February 2009.

Disclosure Committee

The Disclosure Committee, chaired by the Group’s Financial Controller, and comprising the Company Secretary and other senior executives, reports to the Chief Executive and the Finance Director, and to the Audit Committee. Its duties include ensuring that information required to be disclosed in reports pursuant to UK and US accounting, statutory or listing requirements, fairly represents the Group’s position in all material respects.

General Purposes Committee

The General Purposes Committee comprises any one Executive Committee member together with a senior officer from an agreed and restricted list of senior executives. It is always chaired by an Executive Committee member. It attends to business of a routine nature and to the administration of matters, the principles of which have been agreed previously by the Board or an appropriate committee.

A description of the significant ways in which the Company’s actual corporate governance practices differ from the New York Stock Exchange corporate governance requirements followed by US companies can be found on page 77.

EMPLOYEES

The Group employed an average of 8,334 people worldwide in the year ended December 31, 2008. Of these, approximately 94% were employed on a full-time basis and 6% were employed on a part-time basis.

The table below analyzes the distribution of the average number of employees for the last three fiscal periods by division and by geographic region.

	EMEA		Americas		Asia Pacific		Central		Total
2008		2,012		3,570		1,481		1,271		8,334
2007		2,249		3,761		1,514		1,150		8,674
2006		3,940		3,771		1,252		1,023		9,986

The costs of the above employees are borne by the Group. In addition, the Group employs 4,037 (2007 3,695, 2006 3,543) people who work in managed hotels or directly on behalf of the system funds and whose costs of $235 million (2007 $216 million, 2006 $198 million) are borne by those hotels or by the funds.

Under EU law, many employees of Group companies are now covered by the Working Time Regulations which came into force in the United Kingdom on October 1, 1998. These regulations implemented the European Working Time Directive and parts of the Young Workers Directive, and lay down rights and protections for employees in areas such as maximum working hours, minimum rest time, minimum days off and paid leave.

In the United Kingdom there is in place a national minimum wage under the National Minimum Wage Act. At December 31, 2008, the minimum wage for individuals between 18 and under the age of 22 was £4.77 per hour and £5.73 per hour for individuals age 22 and above. This particularly impacts businesses in the hospitality and retailing sectors. Compliance with the National Minimum Wage Act is being monitored by the Low Pay Commission, an independent statutory body established by the UK Government.

Less than 5% of the Group’s UK employees are covered by collective bargaining agreements with trade unions.

Continual attention is paid to the external market in order to ensure that terms of employment are appropriate. The Group believes the Group companies will be able to conduct their relationships with trade unions and employees in a satisfactory manner.

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SHARE OWNERSHIP

The interests of the directors and officers of the Group at March 23, 2009 were as follows:

	Ordinary shares			% of shares
	of 1329/47 pence			outstanding
Directors
Andrew Cosslett		359,927			0.13
David Kappler		1,400			N/A
Ralph Kugler		1,169			N/A
Jennifer Laing		3,373			N/A
Jonathan Linen(1)		7,343			N/A
Richard Solomons		322,743			0.11
David Webster		32,839			0.01
Ying Yeh		Nil			N/A
Officers
Jim Abrahamson		Nil			N/A
Tom Conophy		79,140			0.03
Peter Gowers		226,771			0.08
Kirk Kinsell		74,187	(2)		0.03
Tracy Robbins		68,035			0.02
Tom Seddon		39,452	(3)		0.01
George Turner		Nil			N/A

(1)	Held in the form of American Depositary Shares (ADS).
(2)	637 of which are held as ADSs.
(3)	24,000 of which are held as ADSs.

The above shareholdings are all beneficial interests. The percentage of ordinary share capital owned by each of the directors is negligible.

The directors’ interests as at December 31, 2008 in options to subscribe for shares in InterContinental Hotels Group PLC are set out on page F-39.

The directors do not have different voting rights from other shareholders of the Company.

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ITEM 7.   MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

MAJOR SHAREHOLDERS

As far as is known to management, IHG is not directly or indirectly owned or controlled by another corporation or by any government. As at the dates shown, and under the provisions of the Companies Act, the Company has been advised of the following interests in its shares, being greater than 3% of its issued share capital:

	March 23, 2009					March 14, 2008					March 16, 2007
	Number of		Percent			Number of		Percent			Number of		Percent
Identity of person or group	shares/ADSs		of class			shares/ADSs		of class			shares/ADSs		of class
Ellerman Corporation Limited		29,921,742		10.00	%		29,921,742		10.00	%		25,286,950		7.13	%
Morgan Stanley Investment Management Limited		16,494,690		5.60	%		16,494,690		5.60	%		N/A		N/A
Cedar Rock Capital Limited		14,923,417		5.07	%		14,923,417		5.07	%		N/A		N/A
Morgan Stanley Institutional Securities Group & Global Wealth Management		N/A		N/A			13,551,634		4.60	%		N/A		N/A
Legal & General Group Plc		11,416,590		3.99	%		12,179,257		4.09	%		11,927,715		3.37	%
Lloyds TSB Group Plc*		13,619,563		3.84	%		13,619,563		3.84	%		13,619,563		3.84	%

* Now called Lloyds Banking Group plc.

The Company’s major shareholders do not have different voting rights from other shareholders of the Company. The Company does not know of any arrangements the operation of which may result in a change in its control.

As of March 23, 2009, 11,002,934 ADSs equivalent to 11,002,934 ordinary shares, or approximately 3.85% of the total ordinary shares in issue, were outstanding and were held by 1,009 holders. Since certain ordinary shares are registered in the names of nominees, the number of shareholders of record may not be representative of the number of beneficial owners.

As of March 23, 2009, there were a total of 62,678 record holders of ordinary shares, of whom 325 had registered addresses in the United States and held a total of 1,306,703 ordinary shares (0.46% of the total issued).

RELATED PARTY TRANSACTIONS

The Company has not entered into any related party transactions or loans for the period beginning January 1, 2008 up to March 23, 2009.

ITEM 8.   FINANCIAL INFORMATION

CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION

Financial Statements

See “Item 18. Financial Statements”.

Legal Proceedings

Group companies have extensive operations in the United Kingdom, as well as internationally, and are involved in a number of legal and arbitration proceedings incidental to those operations. It is the Company’s view that such proceedings, either individually or in the aggregate, have not in the recent past and are not likely to have a significant effect on the Group’s financial position or profitability.

Dividends

See “Item 3. Key Information — Dividends”.

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SIGNIFICANT CHANGES

None.

ITEM 9.   THE OFFER AND LISTING

The principal trading market for the Company’s ordinary shares is the London Stock Exchange on which InterContinental Hotels Group shares are traded. The ordinary shares are also listed on the New York Stock Exchange trading in the form of ADSs evidenced by ADRs. Each ADS represents one ordinary share. InterContinental Hotels Group has a sponsored ADR facility with JP Morgan Chase Bank, N.A. as Depositary.

The following tables show, for the fiscal periods indicated, the reported high and low middle market quotations (which represent an average of closing bid and ask prices) for the ordinary shares on the London Stock Exchange, as derived from the Daily Official List of the UK Listing Authority, and the highest and lowest sales prices of the ADSs as reported on the New York Stock Exchange composite tape.

	£ per
	ordinary share				$ per ADS
Year ended December 31	High		Low		High		Low
2004		6.91		4.79		13.09		8.70
2005		8.42		6.12		14.53		11.49
2006		12.65		8.07		26.27		14.40

	£ per
	ordinary share				$ per ADS
Year ended December 31	High		Low		High		Low
2007
First quarter		13.42		12.06		30.81		27.17
Second quarter(1)		14.20		12.41		32.59		24.78
Third quarter		13.16		9.19		26.59		18.52
Fourth quarter		11.20		8.73		23.34		17.37
2008
First quarter		8.84		6.44		17.40		13.26
Second quarter		8.65		6.68		16.80		13.15
Third quarter		7.87		6.16		14.76		11.53
Fourth quarter		6.75		4.48		12.08		6.52
2009
First quarter (through March 23, 2009)		6.22		4.46		9.33		6.04

(1) Prices adjusted for the share consolidation effective June 4, 2007. Unadjusted prices for the quarter were £14.13 and £12.16 and $28.18 and $24.17 respectively.

	£ per
	ordinary share				$ per ADS
Month ended	High		Low		High		Low
September 2008		7.87		6.70		14.25		11.53
October 2008		6.75		4.72		12.08		7.26
November 2008		5.86		4.48		9.30		6.52
December 2008		5.75		4.96		9.02		7.17
January 2009		6.22		5.17		9.33		7.04
February 2009		5.59		4.54		8.27		6.39
March 2009 (through to March 23, 2009)		5.59		4.46		8.25		6.04

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Fluctuations in the exchange rates between pounds sterling and the US dollar will affect the dollar equivalent of the pounds sterling price of the ordinary shares on the London Stock Exchange and, as a result, are likely to affect the market price of ADSs.

PLAN OF DISTRIBUTION

Not applicable.

SELLING SHAREHOLDERS

Not applicable.

DILUTION

Not applicable.

EXPENSES OF THE ISSUE

Not applicable.

ITEM 10.   ADDITIONAL INFORMATION

MEMORANDUM AND ARTICLES OF ASSOCIATION

The following summarizes material rights of holders of the Company’s ordinary shares under the material provisions of the Company’s memorandum and articles of association and English law. This summary is qualified in its entirety by reference to the Companies Act and the Company’s memorandum and articles of association. The Company’s memorandum and articles of association are filed as an exhibit to this 20-F.

The Company’s shares may be held in certificated or uncertificated form. No holder of the Company’s shares will be required to make additional contributions of capital in respect of the Company’s shares in the future.

In the following description, a “shareholder” is the person registered in the Company’s register of members as the holder of the relevant share.

Principal Objects

The Company is incorporated under the name InterContinental Hotels Group PLC and is registered in England and Wales with registered number 5134420. The Company’s memorandum of association provides that its objects include to acquire certain predecessor companies and carry on business as an investment holding company, licensed victuallers, to deal in commodities, to acquire and operate breweries, hotels and restaurants, as well as to carry on any other business which the Company may judge capable of enhancing the value of the Company’s property or rights. The memorandum grants to the Company a range of corporate capabilities to effect these objects.

Directors

Under the Company’s articles of association, a director may not vote in respect of any proposal in which he, or any person connected with him, has any material interest other than by virtue of his interests in securities of, or otherwise in or through, the Company. This is subject to certain exceptions relating to proposals (a) indemnifying him in respect of obligations incurred on behalf of the Company, (b) indemnifying a third party in respect of obligations of the Company for which the director has assumed responsibility under an indemnity or guarantee, (c) relating to an offer of securities in which he will be interested as an underwriter, (d) concerning another body corporate in which the director is beneficially interested in less than one percent of the issued shares of any class of shares of such a body corporate, (e) relating to an employee benefit in which the director will share equally with other employees and (f) relating to liability insurance that the Company is empowered to purchase for the benefit of directors of the Company in respect of actions undertaken as directors (or officers) of the Company.

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The directors are empowered to exercise all the powers of the Company to borrow money, subject to the limitation that the aggregate amount of all moneys borrowed by the Company and its subsidiaries shall not exceed an amount equal to three times the Company’s share capital and consolidated reserves, unless sanctioned by an ordinary resolution of the Company.

Directors are not required to hold any shares of the Company by way of qualification.

Rights Attaching to Shares

Under English law, dividends are payable on the Company’s ordinary shares only out of profits available for distribution, as determined in accordance with accounting principles generally accepted in the United Kingdom and by the Companies Act. Holders of the Company’s ordinary shares are entitled to receive such dividends as may be declared by the shareholders in general meeting, rateably according to the amounts paid up on such shares, provided that the dividend cannot exceed the amount recommended by the directors.

The Company’s board of directors may pay shareholders such interim dividends as appear to them to be justified by the Company’s financial position. If authorized by an ordinary resolution of the shareholders, the board of directors may also direct payment of a dividend in whole or in part by the distribution of specific assets (and in particular of paid up shares or debentures of any other company).

Any dividend unclaimed after six years from the date the dividend was declared, or became due for payment, will be forfeited and will revert to the Company.

Voting Rights

Voting at any general meeting of shareholders is by a show of hands unless a poll, which is a written vote, is duly demanded. On a show of hands, every shareholder who is present in person or by proxy at a general meeting has one vote regardless of the number of shares held. On a poll, every shareholder who is present in person or by proxy has one vote for every 1329/47 pence in nominal amount of the shares held by that shareholder. A poll may be demanded by any of the following:

•  the chairman of the meeting;

•  at least five shareholders present in person or by proxy and entitled to vote at the meeting;

•  any shareholder or shareholders representing in the aggregate not less than one-tenth of the total voting rights of all shareholders entitled to vote at the meeting; or

•  any shareholder or shareholders holding shares conferring a right to vote at the meeting on which there have been paid-up sums in the aggregate equal to not less than one-tenth of the total sum paid up on all the shares conferring that right.

A proxy form will be treated as giving the proxy the authority to demand a poll, or to join others in demanding one.

The necessary quorum for a general meeting is three persons carrying a right to vote upon the business to be transacted, whether present in person or by proxy.

Matters are transacted at general meetings of the Company by the proposing and passing of resolutions, of which there are three kinds:

•  an ordinary resolution, which includes resolutions for the election of directors, the approval of financial statements, the cumulative annual payment of dividends, the appointment of auditors, the increase of authorized share capital or the grant of authority to allot shares;

•  a special resolution, which includes resolutions amending the Company’s memorandum and articles of association, disapplying statutory pre-emption rights or changing the Company’s name; and

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•  an extraordinary resolution, which includes resolutions modifying the rights of any class of the Company’s shares at a meeting of the holders of such class or relating to certain matters concerning the Company’s winding up.

An ordinary resolution requires the affirmative vote of a majority of the votes of those persons voting at a meeting at which there is a quorum.

Special and extraordinary resolutions require the affirmative vote of not less than three-fourths of the persons voting at a meeting at which there is a quorum.

In the case of an equality of votes, whether on a show of hands or on a poll, the chairman of the meeting is entitled to cast the deciding vote in addition to any other vote he may have.

Annual General Meetings must be convened upon advance written notice of 21 days. Other meetings must be convened upon advance written notice of 21 days for the passing of a special resolution and 14 days for any other resolution, depending on the nature of the business to be transacted. The days of delivery or receipt of the notice are not included. The notice must specify the nature of the business to be transacted. The board of directors may if they choose make arrangements for shareholders who are unable to attend the place of the meeting to participate at other places.

Each Director shall retire every three years at the Annual General Meeting and unless otherwise decided by the Directors, shall be eligible for re-election.

Variation of Rights

If, at any time, the Company’s share capital is divided into different classes of shares, the rights attached to any class may be varied, subject to the provisions of the Companies Act, with the consent in writing of holders of three-fourths in nominal value of the issued shares of that class or upon the adoption of an extraordinary resolution passed at a separate meeting of the holders of the shares of that class. At every such separate meeting, all of the provisions of the articles of association relating to proceedings at a general meeting apply, except that the quorum is to be the number of persons (which must be two or more) who hold or represent by proxy not less than one-third in nominal value of the issued shares of the class.

Rights in a Winding-up

Except as the Company’s shareholders have agreed or may otherwise agree, upon the Company’s winding up, the balance of assets available for distribution:

•  after the payment of all creditors including certain preferential creditors, whether statutorily preferred creditors or normal creditors; and

•  subject to any special rights attaching to any class of shares;

is to be distributed among the holders of ordinary shares according to the amounts paid-up on the shares held by them. This distribution is generally to be made in cash. A liquidator may, however, upon the adoption of an extraordinary resolution of the shareholders, divide among the shareholders the whole or any part of the Company’s assets in kind.

Limitations on Voting and Shareholding

There are no limitations imposed by English law or the Company’s memorandum or articles of association on the right of non-residents or foreign persons to hold or vote the Company’s ordinary shares or ADSs, other than the limitations that would generally apply to all of the Company’s shareholders.

MATERIAL CONTRACTS

The following contracts have been entered into otherwise than in the course of ordinary business by members of the Group either (i) in the two years immediately preceding the date of this document in the case of contracts which are or may be material or (ii) which contain provisions under which any Group member has any obligation or

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entitlement which is material to the Group as at the date of this document. To the extent that these agreements include representations, warranties and indemnities, such provisions are considered standard in an agreement of that nature, save to the extent identified below.

IHG Facility Agreement

On May 2, 2008, InterContinental Hotels Group PLC signed a five year $2,100 million bank facility agreement (the “IHG Facility Agreement”) with Bank of America N.A., The Bank of Tokyo-Mitsubishi UFJ, Ltd., Barclays Capital, HSBC Bank plc, Lloyds TSB Bank plc, The Royal Bank of Scotland plc, Société Générale Corporate & Investment Banking and WestLB AG, London Branch, all acting as mandated lead arrangers and underwriters and HSBC Bank plc as agent bank.

The facility was split into a $1.6 billion five year revolving credit facility and a $500 million 30 month term loan facility.

The interest margin payable on borrowings under the IHG Facility Agreement is linked to IHG’s consolidated net debt to consolidated EBITDA ratio. The margin can vary between LIBOR + 0.475% and LIBOR + 1.05% depending on the level of the ratio.

Disposal to Hospitality Properties Trust

On December 17, 2004, BHR Texas L.P., InterContinental Hotels Group Resources, Inc., Crowne Plaza LAX, LLC, Crowne Plaza Hilton Head Holding Company, Holiday Pacific Partners Limited Partnership, 220 Bloor Street Hotel Inc. and Staybridge Markham, Inc. (together, the “Vendors”) entered into a Purchase and Sale Agreement (as amended and restated on February 9, 2005) with HPT IHG — 2 Properties Trust (“HPT IHG-2”), pursuant to which HPT IHG-2 purchased from the Vendors 12 hotels situated in the United States and Canada. On the same date, Six Continents International Holdings B.V. (“SIH”), entered into a Stock Purchase Agreement (as amended and restated on February 9, 2005) with HPT IHG-2, pursuant to which HPT IHG-2 purchased from SIH all of the shares in Crowne Plaza (Puerto Rico) Inc., which is the owner of a hotel in Puerto Rico. The total consideration payable by HPT IHG-2 for the sales amounted to US$425 million, before transaction costs, equivalent to net book value (of which US$395 million was received upon the main completion of the sale on February 16, 2005, with the remaining US$30 million received upon the completion of the sale of the InterContinental Hotel in Austin, on June 1, 2005). The Group continues to manage the hotels.

Under the Purchase and Sale Agreement and Stock Purchase Agreement, the Vendors have given certain customary warranties and indemnities to HPT IHG-2.

In connection with the disposals referred to above, IHG has agreed to guarantee certain amounts payable to HPT IHG and HPT IHG-2 in relation to the managed hotels sold by the Group to HPT IHG and HPT IHG-2. The guarantee is for a maximum amount of $125 million and requires amounts to be paid by IHG to HPT IHG and/or HPT IHG-2 (and/or their designated affiliate) irrespective of the revenue generated by the relevant hotels. The guarantee may be terminated if certain financial tests are met.

UK Hotels Disposal

A Share Purchase Agreement (the “SPA”) was entered into on March 10, 2005 between Six Continents, IHC London (Holdings) Limited (“IHC Holdings”) and LRG. Pursuant to the SPA, Six Continents and IHC Holdings (the “Sellers”) agreed to sell all of the issued ordinary share capital of Six Continents Hotels & Holidays Limited, Holiday Inn Limited, NAS Cobalt No. 2 Limited and London Forum Hotel Limited respectively (together, the “LRG Shares”) to LRG and to transfer to LRG certain contractual rights to the extent they related to the hotels LRG indirectly acquired under the SPA (the “LRG Hotels”) and which remained to be completed or performed, or remained in force, after completion of the sale of the LRG Shares to LRG.

The agreed sale price for the LRG Shares was £1 billion. Proceeds of £40 million were deferred and were contingent upon certain pre-agreed performance targets being reached. Following completion, the Group continues to manage the LRG Hotels.

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Under the SPA, the Sellers gave certain warranties in relation to the assets disposed of and LRG gave certain warranties in relation to its authority to enter into the SPA and its capacity to perform its obligations under the SPA. Certain indemnities were also given by the Sellers.

Australasian Hotels Disposals

On September 1, 2005, Holiday Inn Holdings (Australia) Pty Limited, SPHC Group Pty Limited and HIA(T) Pty Limited (for the Australian assets) and Hale International Limited (for the New Zealand asset), all three of which are members of the Group, (“IHG”) entered into two sale and purchase agreements with HANZ (Australia) Pty Limited (for the Australian assets) and HANZ Holdings (New Zealand) Limited (for the New Zealand asset), both companies being subsidiaries of the Hotel Alternative (Australia and New Zealand) Private Syndicate managed by Eureka Funds Management Limited (“Eureka”) pursuant to which Eureka purchased from IHG nine hotels situated in Australia and New Zealand for AUS$390 million in cash (before transaction costs) which is AUS$75 million above the net book value of AUS$315 million. IHG gave to Eureka normal warranties in relation to the hotels and an indemnity for pre-completion tax liabilities. The transaction completed on October 31, 2005.

The Group continues to manage the hotels for Eureka under ten year management contracts entered into at the time of the transaction, with an option to extend for ten further years at the Group’s discretion.

Disposal to Dabicam SAS

On September 8, 2005, a sale and purchase agreement (“SPA”) was entered into between BHR Holdings BV, a wholly owned subsidiary of IHG, and Dabicam SAS, an affiliate of GIC Real Estate Pte. Ltd. Under the SPA the seller agreed to sell the InterContinental Hotel Paris. The agreed sale price for the hotel was €315 million. The hotel is no longer operated under an IHG Hotels brand. Under the SPA the sellers gave certain customary warranties and indemnities to the purchaser. Following receipt of shareholder approval, in connection with the sale, at an Extraordinary General Meeting of IHG on October 26, 2005 the sale was completed on November 1, 2005.

Britvic Underwriting Agreement

An Underwriting Agreement was entered into on November 25, 2005 between, inter alia, Britvic, IHG in its capacity as a selling shareholder, the directors of Britvic, Citigroup and Deutsche Bank AG (as joint sponsors) and Citigroup, Deutsche Bank AG, Lehman Brothers International (Europe) and Merrill Lynch International (as joint Underwriters). This set out the mechanics for the Britvic initial public offering and included customary termination rights. Britvic gave customary warranties, indemnities and undertakings in the context of an agreement of this sort. IHG also gave customary warranties and indemnities in its capacity as a selling shareholder. Under this agreement, each of the selling shareholders paid a commission equal to 2% of the offer price multiplied by the number of shares sold by that selling shareholder to the joint Underwriters.

Disposal to Westbridge

On March 10, 2006 a Sale and Purchase Agreement (“SPA”) was entered into between BHR Luxembourg S.a.r.l. and other wholly owned subsidiaries of IHG as sellers (BHR Luxembourg S.a.r.l. being the principal seller) and Cooperatie Westbridge Europe I U.A. as purchaser and Westbridge Hospitality Fund L.P. as the purchaser’s guarantor. Under the SPA the sellers agreed to sell 23 hotels situated across Europe in France, Germany, Belgium, the Netherlands, Austria, Italy and Spain.

The agreed sale price was €352 million. IHG’s share of the proceeds was €345.2 million (before transaction costs), in cash and the assumption of debt, and the balance of €6.8 million relates to third-party minority interests.

The hotels continue to be operated by the purchaser under the same IHG Hotels brands under 15 year franchise agreements.

Under the SPA the sellers gave certain customary warranties and indemnities to the purchaser.

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Disposal to Morgan Stanley Real Estate Funds

On July 13, 2006 a sale and purchase agreement (“SPA”) was entered into between BHR Holdings BV and other wholly owned subsidiaries of IHG as sellers (BHR Holdings BV being the principal seller) and a subsidiary of Morgan Stanley Real Estate Funds MSREF VI Danube BV. Under the SPA the sellers agreed to sell seven InterContinental branded hotels situated across Europe in France, Germany, the Netherlands, Austria, Hungary, Italy and Spain.

The agreed sale price for the seven hotels was €634 million. IHG Hotels retained 30 year management contracts on the hotels, with two ten year renewals at IHG Hotels’ discretion, giving a total potential contract length of 50 years.

Under the SPA the sellers gave certain customary warranties and indemnities to the purchaser.

EXCHANGE CONTROLS

There are no restrictions on dividend payments to US citizens.

Although there are currently no UK foreign exchange control restrictions on the export or import of the capital or the payment of dividends on the ordinary shares or the ADSs, from time to time English law imposes restrictions on the payment of dividends to persons resident (or treated as so resident) in or governments of (or persons exercising public functions in) certain countries (each of the foregoing, a “Prohibited Person”).

There are no restrictions under the articles of association or under English law that limit the right of non-resident or foreign owners to hold or vote the ordinary shares. However, under current English law, ordinary shares or ADSs may not be owned by a Prohibited Person. In addition, the Company’s articles of association contain certain limitations on the voting and other rights of any holder of ordinary shares, whose holding may, in the opinion of the directors, result in the loss or failure to secure the reinstatement of any license or franchise from any US governmental agency held by Six Continents Hotels Inc or any subsidiary thereof.

TAXATION

This section provides a summary of the material US federal income tax and UK tax consequences to US holders, as defined below, of owning and disposing of ordinary shares or ADSs of the Company. This section addresses only the tax position of a US holder who holds ordinary shares or ADSs as capital assets. This section does not, however, discuss the tax consequences of members of special classes of holders subject to special rules, such as

•  certain financial institutions;

•  insurance companies;

•  dealers and traders in securities or foreign currencies;

•  persons holding ordinary shares or ADSs as part of a hedge, straddle, conversion transaction, integrated transaction or similar transaction;

•  persons whose functional currency for US federal income tax purposes is not the US dollar;

•  partnerships or other entities classified as partnerships for US federal income tax purposes;

•  persons liable for the alternative minimum tax;

•  tax-exempt organizations;

•  persons who acquired our ADSs or ordinary shares pursuant to the exercise of any employee stock option or otherwise as compensation;

•  holders that, directly or indirectly, hold 10% or more of the Company’s voting stock.

This section does not generally deal with the position of a US holder who is resident or ordinarily resident in the United Kingdom for UK tax purposes or who is subject to UK taxation on capital gains or income by virtue of carrying on a trade, profession or vocation in the United Kingdom through a branch, agency or permanent

69

establishment and such ADSs or ordinary shares are or have been used, held or acquired for the purposes of such trade, profession or vocation.

A US holder is a beneficial owner of ordinary shares or ADSs who is for US federal income tax purposes (i) a citizen or resident of the US, (ii) a US domestic corporation, or other entity taxable as a corporation, created or organized in or under the laws of the United States or any political subdivision thereof; (iii) an estate whose income is subject to US federal income tax regardless of its source, or (iv) a trust if a US court can exercise primary supervision over the trust’s administration and one or more United States persons are authorized to control all substantial decisions of the trust.

This section is based on the Internal Revenue Code of 1986, as amended, its legislative history, existing and proposed regulations, published rulings and court decisions, and on UK tax laws and published practice of the UK HM Revenue and Customs, all as of the date hereof. These laws are subject to change, possibly on a retroactive basis.

This section is further based in part upon the representations of the Depositary and assumes that each obligation in the deposit agreement and any related agreement will be performed in accordance with its terms. For US federal income tax purposes, an owner of ADRs evidencing ADSs will generally be treated as the owner of the underlying shares represented by those ADSs. Generally, exchanges of ordinary shares for ADRs, and ADRs for ordinary shares, will not be subject to US federal income tax or UK taxation on capital gains.

The US Treasury has expressed concerns that parties to whom ADRs are pre-released may be taking actions that are inconsistent with the claiming of foreign tax credits for US holders of ADRs. Such actions would also be inconsistent with the claiming of the reduced rate of tax, described below, for qualified dividend income. Accordingly, the analysis of the availability of the reduced rate of tax for qualified dividend income described below could be affected by actions taken by parties to whom the ADRs are pre-released.

Investors should consult their own tax advisors regarding the US federal, state and local, the UK and other tax consequences of owning and disposing of shares and ADSs in their particular circumstances.

Taxation of Dividends

United Kingdom Taxation

Under current UK tax law, the Company will not be required to withhold tax at source from dividend payments it makes.

A US holder who is not resident or ordinarily resident for United Kingdom tax purposes in the United Kingdom will generally not be liable for UK taxation on dividends received in respect of the ADSs or ordinary shares.

United States Federal Income Taxation

Subject to the passive foreign investment company (“PFIC”) rules discussed below, a US holder is subject to US federal income taxation on the gross amount of any dividend paid by the Company out of its current or accumulated earnings and profits (as determined for US federal income tax purposes). Distributions in excess of the Company’s current and accumulated earnings and profits, as determined for US federal income tax purposes, will be treated as a return of capital to the extent of the US holder’s basis in the shares or ADSs and thereafter as capital gain. Because the Company has not historically maintained, and does not currently maintain, books in accordance with US tax principles, the Company does not expect to be in a position to determine whether any distribution will be in excess of the Company’s current and accumulated earnings and profits as computed for US federal income tax purposes. As a result, the Company expects that amounts distributed will be reported to the Internal Revenue Service as dividends.

Subject to applicable limitations and the discussion above regarding concerns expressed by the US Treasury, dividends paid to a non-corporate US holder in taxable years beginning before January 1, 2011 that constitute qualified dividend income will be taxable to the holder at a maximum tax rate of 15%. The Company expects that dividends paid by the Company with respect to the shares or ADSs will constitute qualified dividend income.

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U.S. Holders should consult their own tax advisors to determine whether they are subject to any special rules that limit their ability to be taxed at this favorable rate.

Dividends must be included in income when the US holder, in the case of shares, or the Depositary, in the case of ADSs, actually or constructively receives the dividend, and will not be eligible for the dividends-received deduction generally allowed to US corporations in respect of dividends received from other US corporations. For foreign tax credit limitation purposes, dividends will be income from sources outside the United States.

The amount of any dividend paid in pounds will be the US dollar value of the pound sterling payments made, determined at the spot pound sterling/US dollar rate on the date the dividend distribution is includible in income, regardless of whether the payment is in fact converted into US dollars. If the dividend is converted into US dollars on the date of receipt, a US holder should not be required to recognize foreign currency gain or loss in respect of the dividend income. Generally, any gain or loss resulting from currency exchange fluctuations during the period from the date the dividend payment is includible in income to the date the payment is converted into US dollars will be treated as ordinary income or loss and, for foreign tax credit limitation purposes, from sources within the United States.

Taxation of Capital Gains

United Kingdom Taxation

A US holder who is not resident or ordinarily resident for UK tax purposes in the United Kingdom will not generally be liable for UK taxation on capital gains realized or accrued on the sale or other disposal of ADSs or ordinary shares.

A US holder of ADSs or ordinary shares who is an individual and who, broadly, has temporarily ceased to be resident or ordinarily resident in the UK or has become temporarily treated as non-resident for UK tax purposes for a period of less than five years of assessment and who disposes of ordinary shares or ADSs during that period may, for the year of assessment when that individual becomes resident again in the UK, also be liable to UK tax on capital gains (subject to any available exemption or relief), notwithstanding the fact that such US holder was not resident or ordinarily resident in the United Kingdom at the time of the sale or other disposal.

United States Federal Income Taxation

Subject to the PFIC rules discussed below, a US holder that sells or otherwise disposes of ordinary shares or ADSs will recognize a capital gain or loss for US federal income tax purposes equal to the difference between the US dollar value of the amount realized and its tax basis, determined in US dollars, in the ordinary shares or ADSs. Such capital gain or loss will be long-term capital gain or loss where the holder has a holding period greater than one year. The gain or loss will generally be income or loss from sources within the United States for foreign tax credit limitation purposes. The deductibility of losses is subject to limitations.

PFIC Rules

The Company believes that it was not a PFIC for US federal income tax purposes for its 2008 taxable year. However, this conclusion is an annual factual determination and thus may be subject to change. If the Company were to be treated as a PFIC, gain realized on the sale or other disposition of ordinary shares or ADSs would in general not be treated as capital gain. Instead, gain would be treated as if the US holder had realized such gain ratably over the holding period for the ordinary shares or ADSs and, to the extent allocated to the taxable year of the sale or other exchange and to any year before the Company became a PFIC, would be taxed as ordinary income. The amount allocated to each other taxable year would be taxed at the highest tax rate in effect for each such year to which the gain was allocated, together with an interest charge in respect of the tax attributable to each such year. In addition, similar rules would apply to any “excess distribution” received on the ordinary shares or ADSs (generally, the excess of any distribution received on the ordinary shares or ADSs during the taxable year over 125% of the average amount of distributions received during a specified prior period), and the preferential rate for “qualified dividend income” received by certain non-corporate US holders would not apply. Certain elections may be available

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(including a market-to-market election) to US holders that would result in alternative treatments of the ordinary shares or ADSs.

Additional Tax Considerations

United States Backup Withholding and Information Reporting

Payments of dividends and other proceeds with respect to ADSs and ordinary shares may be reported to the IRS and to the US holder. Backup withholding may apply to these payments if the US holder fails to provide an accurate taxpayer identification number or certification of exempt status or fails to report all interest and dividends required to be shown on its US federal income tax returns. Certain US holders (including, among others, corporations) are not subject to backup withholding. US holders should consult their tax advisors as to their qualification for exemption from backup withholding and the procedure for obtaining an exemption.

United Kingdom Inheritance Tax

An individual who is domiciled in the United States (for the purposes of the Estate and Gift Tax Convention) and is not a UK national as defined in the Convention will not be subject to UK inheritance tax in respect of ADSs on the individual’s death or on a transfer of the ADSs during their lifetime, provided that any applicable US federal gift or estate tax is paid, unless the ADSs are part of the business property of a UK permanent establishment or pertain to a UK fixed base of an individual used for the performance of independent personal services. Where the ADSs have been placed in trust by a settlor, they may be subject to UK inheritance tax unless, when the trust was created, the settlor was domiciled in the United States and was not a UK national. Where ADSs are subject to both UK inheritance tax and to US federal gift or estate tax, the Estate and Gift Tax Convention generally provides for either a credit against US federal tax liabilities for UK inheritance tax paid or for a credit against UK inheritance tax liabilities for US federal tax paid, as the case may be.

United Kingdom Stamp Duty and Stamp Duty Reserve Tax (“SDRT”)

The transfer of ordinary shares will generally be liable to stamp duty at the rate of 0.5% of the amount or value of the consideration given (rounded up to the nearest £5). An unconditional agreement to transfer ordinary shares will generally be subject to SDRT at 0.5% of the agreed consideration. However, if within the period of six years of the date of such agreement becoming unconditional an instrument of transfer is executed pursuant to the agreement and duly stamped, any liability to SDRT will usually be repaid, if already paid, or canceled. The liability to pay stamp duty or SDRT is generally satisfied by the purchaser or transferee.

No stamp duty or SDRT will generally arise on a transfer of ordinary shares into CREST, unless such transfer is made for a consideration in money or money’s worth, in which case a liability to SDRT will arise, usually at the rate of 0.5% of the value of the consideration.

A transfer of ordinary shares effected on a paperless basis within CREST will generally be subject to SDRT at the rate of 0.5% of the value of the consideration.

Stamp duty, or SDRT, is generally payable upon the transfer or issue of ordinary shares to, or to a nominee or, in some cases, agent of, a person whose business is or includes issuing depositary receipts or the provision of clearance services. For these purposes, the current rate of stamp duty and SDRT is usually 1.5% (rounded up, in the case of stamp duty, to the nearest £5). The rate is applied, in each case, to the amount or value of the consideration or, in some circumstances, to the value or the issue price of the ordinary shares. In accordance with the terms of the deposit agreement, any tax or duty payable on deposits of ordinary shares by the depositary or by the custodian of the depositary will be charged to the party to whom ADSs are delivered against such deposits.

Provided that the instrument of transfer is not executed in the United Kingdom and remains at all subsequent times outside the United Kingdom, no stamp duty should be payable on the transfer of ADSs. An agreement to transfer ADSs in the form of depositary receipts will not give rise to a liability to SDRT.

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DOCUMENTS ON DISPLAY

It is possible to read and copy documents referred to in this annual report on Form 20-F that have been filed with the SEC at the SEC’s public reference room located at 100 F Street, NE Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference rooms and their copy charges. The Company’s SEC filings since May 22, 2002 are also publicly available through the SEC’s website located at www.sec.gov.

ITEM 11.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Exchange and Interest Rate Risk, and Financial Instruments

The Group’s treasury policy is to manage the financial risks that arise in relation to the underlying business needs. The activities of the treasury function are carried out in accordance with board approved policies and are subject to regular internal audit. The treasury function does not operate as a profit center.

Treasury Risk Management

The treasury function seeks to reduce the financial risk of the Group and manages liquidity to meet all foreseeable cash needs. Treasury activities include money market investments, spot and forward foreign exchange instruments, currency options, currency swaps, interest rate swaps, options and forward rate agreements. One of the primary objectives of the Group’s treasury risk management policy is to mitigate the adverse impact of movements in interest rates and foreign exchange rates. Derivatives are not used for trading or speculative purposes.

Credit Risk

Credit Risk on treasury transactions is minimized by operating a policy on the investment of surplus funds that generally restricts counterparties to those with an A credit rating or better, or those providing adequate security. Limits are also set for individual counterparties. Notwithstanding that counterparties must have an A credit rating or better, during periods of significant financial market turmoil, counterparty exposure limits are significantly reduced and counterparty credit exposure reviews are broadened to include the relative placing of credit default swap pricings. Most of the Group’s surplus funds are held in the United Kingdom or United States and there are no material funds where repatriation is restricted as a result of foreign exchange regulations.

Interest Rate Risk

The Group has an exposure to interest rate fluctuations on its borrowings and it seeks to manage these by the use of interest rate swaps and options, and forward rate agreements. The Group takes out interest rate swaps to fix the interest flows on between 25% and 75% of its borrowings in major currencies.

At December 31, 2008, the Group held interest rate swaps (swapping floating for fixed) with notional principals of $250 million, £75 million, and €75 million (2007 $100 million, £150 million and €75 million).

At December 31, 2008, the Group also held forward-starting interest rate swaps with notional principals of $100 million, £75 million and €75 million (2007 £150 million and €75 million). These swaps will replace current swaps with the same notional principals when they mature in 2009.

Based on the year end net debt position and given the underlying maturity profile of investments, borrowings and hedging instruments at that date, a one percentage point rise in US dollar interest rates would increase the annual net interest charge by approximately $4.7 million. A similar rise in euro and sterling interest rates would increase the annual net interest charge by approximately $1.2 million and $0.9 million respectively.

Currency Risk

The US dollar is the predominant currency of the Group’s revenue and cash flows, and movements in foreign exchange rates, particularly the US dollar and euro, can affect the Group’s reported profits, net assets and interest cover. To hedge this translation exposure, wherever possible, the Group denominates the currency of its debt (either directly or via derivatives) to match the currency of its net assets, whilst trying to maximize the amount of US

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dollars borrowed. At December 31, 2008, the Group held outstanding forward foreign exchange contracts with a principal of $nil (2007 $12 million) and a fair value of $nil (2007 $nil).

The Group is exposed to foreign currency risk on income streams denominated in foreign currencies. Foreign exchange transaction exposure is managed by forward purchase or sale of foreign currencies or the use of currency options. Most significant exposures of the Group are in currencies that are freely convertible. At December 31, 2008 there were no outstanding contracts hedging currency risk on income streams.

A general strengthening of the US dollar (specifically a five cent fall in the sterling: US dollar rate) would increase the Group’s profit before tax by an estimated $4.0 million and decrease net assets by an estimated $1.1 million. Similarly, a five cent fall in the euro: US dollar rate would reduce the Group’s profit before tax by an estimated $2.0 million and decrease net assets by an estimated $4.3 million.

Quantitative Information about Market Risk

Interest Rate Sensitivity

The tables below provide information about the Group’s derivative and other financial instruments that are sensitive to changes in interest rates, including interest rate swaps and debt obligations. For long-term debt obligations, the table presents principal cash flows and related weighted average interest rates by expected maturity dates. For interest rate swaps and forward rate agreements, the table presents notional amounts and weighted average interest rates by expected maturity dates. Weighted average variable rates are based on rates set at the balance sheet date. The actual currencies of the instruments are indicated in parentheses.

At December 31, 2008

	Expected to mature before December 31,
	2009			2010			2011		2012		Thereafter			Total			Fair value(i)
	($ million, except percentages)
Long-Term Debt:
Fixed Rate lease debt (US dollar)		—			—			—		—		202			202			168
Average dollar interest rate												9.7	%		9.7	%
Variable Rate bank debt (various currencies)		5			502			—		—		646			1,153			1,153
Average interest rate		7.8	%		1.5	%						2.6	%		2.1	%

	(local currency million, except percentages)
Interest Rate Swaps:
Principal (US dollar)		250		—	—		100		—	350		(2	)
Fixed rate payable		2.9	%				2.0	%		2.6	%
Variable rate receivable		1.3	%				1.3	%		1.3	%
Principal (euro)		75		—	75		—		—	150		(5	)
Fixed rate payable		3.9	%		5.3	%				4.6	%
Variable rate receivable		2.7	%		2.7	%				2.7	%
Principal (sterling)		75		—	—		—		—	75		(3	)
Fixed rate payable		6.1	%							6.1	%
Variable rate receivable		2.2	%							2.2	%

(i) Represents the net present value of the expected cash flows discounted at current market rates of interest.

ITEM 12.   DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable.

74

PART II

ITEM 13.   DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

None.

ITEM 14.   MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

None.

ITEM 15.   CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

As at the end of the period covered by this report, the Group carried out an evaluation under the supervision and with the participation of the Group’s management, including the Chief Executive and Finance Director, of the effectiveness of the design and operation of the disclosure controls and procedures (as defined in Rules 13a-15(c) and 15d-15(e)). These are defined as those controls and procedures designed to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the specified periods. Based on that evaluation, the Chief Executive and Finance Director concluded that the Group’s disclosure controls and procedures were effective.

Management’s Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934.

Management has issued a report on the effectiveness of the Group’s Internal Control over Financial reporting as at December 31, 2008. This report appears on page F-1 of the Group’s Consolidated Financial Statements contained in this Annual Report.

Ernst & Young LLP, an independent registered public accounting firm, has issued an attestation report on the Company’s internal control over financial reporting. This report appears on page F-2 of the Group’s Consolidated Financial Statements contained in this Annual Report.

Changes in Internal Control Over Financial Reporting

There have been no changes in the Group’s internal controls over financial reporting that occurred during the period covered by this Form 20-F that have materially affected, or are reasonably likely to materially affect, the Group’s internal control over financial reporting.

ITEM 16.   [RESERVED]

ITEM 16A.   AUDIT COMMITTEE FINANCIAL EXPERT

The Senior Independent Director David Kappler, who has significant recent and relevant financial experience is the “Audit Committee Financial Expert” as defined under the regulations of the US Securities and Exchange Commission. David Kappler is independent as that term is defined under the listing standards of the NYSE.

ITEM 16B.   CODE OF ETHICS

The board has adopted a global Code of Ethics and Business Conduct that applies to all directors, officers and employees of the Group, including the Chief Executive and Finance Director. This Code of Ethics has been signed by the Chief Executive and the Finance Director of the Company and by the Group Financial Controller and regional financial heads. The Company has published its Code of Ethics and Business Conduct on its website www.ihg.com.

75

ITEM 16C.   PRINCIPAL ACCOUNTANT FEES AND SERVICES

Fees for professional services provided by Ernst & Young LLP, the Group’s independent auditors in each of the last two fiscal periods in each of the following categories are:

	Year Ended December 31,
	2008		2007
	($ million)
Audit Fees		3.3		5.6
Audit Related Fees		3.2		2.8
Tax Fees		1.0		0.8
Total		7.5		9.2

Further detail is provided in Note 4 “Auditor’s remuneration paid to Ernst & Young LLP” of Item 18 — Financial Statements.

Audit fees in respect of the pension scheme were not material.

The Audit Committee has a process to ensure that any non-audit services do not compromise the independence and objectivity of the external auditor and that relevant UK and US professional and regulatory requirements are met. A number of criteria are applied when deciding whether pre-approval for such services should be given. These include the nature of the service, the level of fees and the practicality of appointing an alternative provider, having regard to the skills and experience required to supply the service effectively. Cumulative fees for audit and non-audit services are presented to the Audit Committee on a quarterly basis for review. The Audit Committee is responsible for monitoring adherence to the pre-approval policy.

ITEM 16D.   EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

Not applicable.

ITEM 16E.   PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

							(d) Maximum
					(c) Total number		number (or
					of shares (or		approximate dollar
			(b) Average		units) purchased		value) of shares (or
	(a) Total number		price paid		as part of publicly		units) that may yet be
	of shares (or		per share		announced plans		purchased under the
Period of fiscal year	units) purchased		(or unit)		or programs		plans or programs
Month 1 (no purchases in this month)		0		0.00		0.		39,144,754
Month 2 (no purchases in this month)		0		0.00		0		39,144,754
Month 3 3.3.08 — 3.31.08		1,718,026		7.69		1,718,026		37,426,728
Month 4 (no purchases in this month)		0		0.00		0		37,426,728
Month 5 5.9.08 — 5.29.08		2,138,424		8.36		2,138,424		35,288,304
Month 6 6.2.08 — 6.30.08		5,362,875		7.25		5,362,875		38,694,043
Month 7 (no purchases in this month)		0		0.00		0		38,694,043
Month 8 (no purchases in this month)		0		0.00		0		38,694,043
Month 9 (no purchases in this month)		0		0.00		0		38,694,043
Month 10 (no purchases in this month)		0		0.00		0		38,694,043
Month 11 (no purchases in this month)		0		0.00		0		38,694,043
Month 12 (no purchases in this month)		0		0.00		0		38,694,043

The first share repurchase program was announced on March 11, 2004 with the intention to repurchase £250 million worth of shares. A second £250 million share repurchase program followed, announced September 9, 2004. A third £250 million share repurchase program was announced on September 8, 2005. These programs were completed on December 20, 2004, April 11, 2006, and June 28, 2007 respectively.

76

On February 20, 2007, the Company announced a fourth, £150 million share repurchase program. By March 23, 2009, 14,446,554 shares had been repurchased at an average price of 831 pence per share (approximately £120 million).

During fiscal 2008, 1,950,000 ordinary shares were purchased by the Company’s Employee Share Ownership Trust at prices ranging from 563 pence to 799 pence per share, for the purpose of satisfying future share awards to employees.

ITEM 16F.   CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT

Not applicable.

ITEM 16G.   SUMMARY OF SIGNIFICANT CORPORATE GOVERNANCE DIFFERENCES FROM NYSE LISTING STANDARDS

The Group is committed to compliance with the principles of corporate governance and aims to follow the corporate governance practices specified in the Combined Code on Corporate Governance, the “Combined Code” issued by the Financial Services Authority in the United Kingdom.

IHG has also adopted the corporate governance requirements of the US Sarbanes-Oxley Act and related rules and of the NYSE, to the extent that they are applicable to it as a foreign private issuer. As a foreign private issuer IHG is required to disclose any significant ways in which its corporate governance practices differ from those followed by US companies. These are as follows:

Basis of regulation

The Combined Code contains a series of principles and provisions. It is not, however, mandatory for companies to follow these principles. Instead, companies must disclose how they have applied them and disclose, if applicable, any areas of non-compliance along with an explanation for the non-compliance. In contrast, US companies listed on the NYSE are required to adopt and disclose corporate governance guidelines adopted by the NYSE. IHG’s statement of compliance with the UK Combined Code’s requirements for 2008 is contained in the Company’s Annual Report and Financial Statements for the year ended December 31, 2008.

Independent Directors

The Combined Code’s principles recommend that at least half the Board, excluding the Chairman, should consist of independent Non-Executive Directors. As at March 23, 2009 the Board consisted of the Chairman, independent at the time of his appointment, two Executive Directors and five independent Non-Executive Directors. NYSE listing rules applicable to US companies state that companies must have a majority of independent directors. The NYSE set out five bright line tests for director independence. The Board’s judgement is that all of its Non-Executive Directors are independent. However it did not explicitly take into consideration the NYSE’s tests in reaching this determination.

Chairman and Chief Executive

The Combined Code recommends that the Chairman and Chief Executive should not be the same individual to ensure that there is a clear division of responsibility for the running of the Company’s business. There is no corresponding requirement for US companies. The roles of Chairman and Chief Executive were, as at March 23, 2009 and throughout 2008 fulfilled by separate individuals.

Committees

The Company has a number of Board Committees which are similar in purpose and constitution to those required for domestic companies under NYSE rules. The Remuneration, Audit and Nomination Committees consist only of Non-Executive Directors. The NYSE requires US companies to have a nominating/corporate governance committee composed entirely of independent directors. The committee is responsible for identifying individuals qualified to become Board members and to recommend to the Board a set of corporate governance principles. As the

77

Company is subject to the Combined Code, the Company’s Nomination Committee is only responsible for nominating, for approval of the Board, candidates for appointment to the Board, though it also assists in developing the role of the Senior Independent Director. The Company’s Nomination Committee consists of the Company Chairman and all the independent Non-Executive Directors. The Chairman of the Company is not a member of either of the Remuneration or the Audit Committees. The Audit Committee is chaired by an independent Non-Executive Director who, in the Board’s view, has the experience and qualifications to satisfy the criteria under US rules for an “audit committee financial expert”.

Non-Executive Director Meetings

Non-management directors of US companies must meet on a regular basis without management present, and independent directors must meet separately at least once per year. The Company’s Non-Executive Directors have met without Executive Directors being present, and intend to continue this practice, before every Board meeting if possible.

Shareholder approval of Equity Compensation Plans

The NYSE rules require that shareholders must be given the opportunity to vote on all equity compensation plans and material revisions to those plans. The Company complies with UK requirements which are similar to the NYSE rules. The Board does not, however, explicitly take into consideration the NYSE’s detailed definition of “material revisions”.

Compliance Certification

Each Chief Executive of a US company must certify to the NYSE each year that he or she is not aware of any violation by the Company of any NYSE corporate governance listing standard. As the Company is a foreign private issuer, the Company’s Chief Executive is not required to make this certification. However he is required to notify the NYSE promptly in writing after any of the Company’s Executive Officers become aware of any material non-compliance with those NYSE corporate governance rules applicable to the Company.

PART III

ITEM 17.   FINANCIAL STATEMENTS

Not applicable.

78

ITEM 18.   FINANCIAL STATEMENTS

The following consolidated financial statements and related schedule, together with the report thereon of Ernst & Young LLP, are filed as part of this Annual Report:

	Page
Management’s Report on Internal Control over Financial Reporting		F-1
Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting		F-2
Report and Consent of Independent Registered Public Accounting Firm		F-3
Financial Statements
Consolidated Income Statement for the years ended December 31, 2008, 2007 and 2006		F-5
Consolidated Statement of Recognized Income and Expense for the years ended December 31, 2008, 2007 and 2006		F-6
Consolidated Balance Sheet for the years ended December 31, 2008 and 2007		F-7
Consolidated Statement of Changes in Shareholders’ Funds for the years ended December 31, 2008, 2007 and 2006		F-8
Consolidated Cash Flow Statement for the years ended December 31, 2008, 2007 and 2006		F-10
Notes to the Financial Statements		F-11
Schedule for the years ended December 31, 2008, 2007, 2006 and 2005
Schedule II — Valuation and Qualifying Accounts		S-1
EXHIBIT 1
EXHIBIT 4(a)(i)
EXHIBIT 8
EX-12.A
EX-12.B
EX-13.A

ITEM 19.   EXHIBITS

The following exhibits are filed as part of this Annual Report:

Exhibit 1	Memorandum and Articles of Association of IHG
Exhibit 4(a)(i)	$2,100 million Facility Agreement dated May 2, 2008 among Bank of America N.A., Bank of Tokyo-Mitsubishi UFJ Ltd., Barclays Capital, HSBC Bank plc, Lloyds TSB Bank plc, The Royal Bank of Scotland plc, Société Générale Corporate & Investment Banking and West LB AG
Exhibit 4(b)(i)	Sale and Purchase Agreement dated March 10, 2006 among BHR Luxembourg S.à.r.l., Others, Cooperatie Westbridge Europe I.U.A., Others and Westbridge Hospitality Fund L.P. relating to a portfolio of certain companies and businesses in continental Europe (incorporated by reference to Exhibit 4(b)(viii) of the InterContinental Hotels Group PLC Annual Report on Form 20-F (File No. 1-10409) dated March 31, 2006)
Exhibit 4(b)(ii)	Sale and Purchase Agreement dated July 13, 2006 between BHR Holdings BV and MSREF VI Danube BV relating to the sale of certain companies and businesses in continental Europe and Side Letter dated September 5, 2006 (incorporated by reference to Exhibit 4(b)(ix) of the InterContinental Hotels Group PLC Annual Report on Form 20-F (File No. 1-10409) dated March 30, 2007)
Exhibit 4(c)(i)	Richard Solomons’ service contract dated February 12, 2003 (incorporated by reference to Exhibit 4(c)(iv) of InterContinental Hotels Group PLC Annual Report on Form 20-F (File No. 1-10409) dated April 8, 2004)
Exhibit 4(c)(ii)	Richard Solomons’ letter of appointment dated April 2005, effective from June 27, 2005 on completion of the Scheme of Arrangement and the introduction of the new parent company to the Group (incorporated by reference to Exhibit 4(c)(vi) of the InterContinental Hotels Group PLC Annual Report on Form 20-F (File No. 1-10409) dated March 31, 2006)
Exhibit 4(c)(iii)	Andrew Cosslett’s service contract dated December 13, 2004 (incorporated by reference to Exhibit 4(c)(v) of InterContinental Hotels Group PLC Annual Report on Form 20-F (File No. 1-10409) dated May 3, 2005)

79

Exhibit 4(c)(iv)	Andrew Cosslett’s letter of appointment dated April 2005, effective from June 27, 2005 on completion of the Scheme of Arrangement and the introduction of the new parent company to the Group (incorporated by reference to Exhibit 4(c)(viii) of the InterContinental Hotels Group PLC Annual Report on Form 20-F (File No. 1-10409) dated March 31, 2006)
Exhibit 8	List of Subsidiaries
Exhibit 12(a)	Certification of Andrew Cosslett filed pursuant to 17 CFR 240.13a-14(a)
Exhibit 12(b)	Certification of Richard Solomons filed pursuant to 17 CFR 240.13a-14(a)
Exhibit 13(a)	Certification of Andrew Cosslett and Richard Solomons furnished pursuant to 17 CFR 240.13a-14(b) and 18 U.S.C.1350
Exhibit 15(a)	Consent of Ernst & Young LLP (included on page F-4)

80

MANAGEMENT’S REPORT ON
INTERNAL CONTROL OVER FINANCIAL REPORTING

Management of InterContinental Hotels Group PLC (“Company” and together with its subsidiaries the “Group”) is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the Group’s principal executive and principal financial officers and effected by the Company’s Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the consolidated financial statements for external purposes in accordance with generally accepted accounting principles.

The Group’s internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the Group’s transactions and dispositions of the Group’s assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of the consolidated financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Group are being made only in accordance with authorizations of the Group’s management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Group’s assets that could have a material effect on the consolidated financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In connection with the preparation of the Group’s annual consolidated financial statements, management has undertaken an assessment of the effectiveness of the Group’s internal control over financial reporting as of December 31, 2008 based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organisations of the Treadway Commission (the “COSO”).

Based on this assessment, management has concluded that as of December 31, 2008, the Group’s internal control over financial reporting is effective based on those criteria.

Ernst & Young LLP, the independent registered public accounting firm that audited the Group’s consolidated financial statements, has issued an attestation report on the Group’s internal control over financial reporting, a copy of which appears on the next page of this Annual Report.

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
ON INTERNAL CONTROL OVER FINANCIAL REPORTING

To the Board of Directors and Shareholders of InterContinental Hotels Group PLC:

We have audited InterContinental Hotels Group PLC’s internal control over financial reporting as of December 31, 2008, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO criteria”). InterContinental Hotels Group PLC’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Form 20-F. Our responsibility is to express an opinion on the Group’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A group’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A group’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the group; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the group are being made only in accordance with authorizations of management and directors of the group; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the group’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, InterContinental Hotels Group PLC maintained, in all material aspects, effective internal control over financial reporting as of December 31, 2008, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the accompanying Consolidated Balance Sheets of InterContinental Hotels Group PLC as of December 31, 2008 and 2007, and the related Consolidated Income Statements, Consolidated Statements of Recognized Income and Expense, Consolidated Statements of Changes in Shareholders’ Funds and Consolidated Cash Flow Statements for each of the three years in the period ended December 31, 2008, and the financial statement schedule listed in the Index at Item 18. Financial Statements, and our report dated April 6, 2009 expressed an unqualified opinion thereon.

ERNST & YOUNG LLP

London, England

April 6, 2009

F-2

INTERCONTINENTAL HOTELS GROUP PLC

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of InterContinental Hotels Group PLC

We have audited the accompanying Consolidated Balance Sheets of InterContinental Hotels Group PLC as of December 31, 2008 and 2007, and the related Consolidated Income Statements, Consolidated Statements of Recognized Income and Expense, Consolidated Statements of Changes in Shareholders’ Funds and Consolidated Cash Flow Statements for each of the three years in the period ended December 31, 2008. Our audits also included the financial statements schedule listed in the Index at Item 18. These financial statements are the responsibility of the Group’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of InterContinental Hotels Group PLC at December 31, 2008 and 2007, and the consolidated results of its operations and its consolidated cash flows for each of the three years in the period ended December 31, 2008, in accordance with International Financial Reporting Standards as adopted by the European Union and International Financial Reporting Standards as issued by the International Accounting Standards Board. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

As discussed in Note 1, the accompanying financial statements as of and for the year ended December 31, 2007 have been restated.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of InterContinental Hotels Group PLC’s internal control over financial reporting as of December 31, 2008, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated April 6, 2009 expressed an unqualified opinion thereon.

ERNST & YOUNG LLP

London, England

April 6, 2009

F-3

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the Registration Statements (Form F-3 No. 333-108084 and Form S-8 Nos. 333-01572, 333-08336, 333-99785, 333-104691 and 333-126139) of InterContinental Hotels Group PLC of the reference to our name in “Item 3. Key Information” and our reports dated April 6, 2009, with respect to the Consolidated Financial Statements and Schedule of InterContinental Hotels Group PLC, and the effectiveness of internal control over financial reporting of InterContinental Hotels Group PLC, included in this Annual Report (Form 20-F) for the year ended December 31, 2008.

ERNST & YOUNG LLP

London, England

April 6, 2009

F-4

INTERCONTINENTAL HOTELS GROUP PLC

CONSOLIDATED INCOME STATEMENT

	Year ended December 31,									Year ended December 31,									Year ended December 31,
	2008									2007									2006
	Before			Exceptional						Before			Exceptional						Before			Exceptional
	exceptional			items						exceptional			items						exceptional			items
For the year ended December 31, 2008	items			(Note 5)			Total			items			(Note 5)			Total			items			(Note 5)		Total
	($ million)
Revenue (Note 2)		1,854			—			1,854			1,771			—			1,771			1,446			—		1,446
Cost of sales		(823	)		—			(823	)		(825	)		—			(825	)		(653	)		—		(653	)
Administrative expenses		(400	)		(59	)		(459	)		(377	)		(14	)		(391	)		(331	)		—		(331	)
Other operating income and expenses		14			25			39			16			70			86			7			44		51
		645			(34	)		611			585			56			641			469			44		513
Depreciation and amortization (Note 2)		(110	)		(2	)		(112	)		(111	)		(2	)		(113	)		(102	)		—		(102	)
Impairment (Note 2)		—			(96	)		(96	)		—			6			6			—			4		4
Operating profit (Note 2)		535			(132	)		403			474			60			534			367			48		415
Financial income (Note 6)		12			—			12			18			—			18			48			—		48
Financial expenses (Note 6)		(113	)		—			(113	)		(108	)		—			(108	)		(68	)		—		(68	)
Profit before tax		434			(132	)		302			384			60			444			347			48		395
Tax (Note 7)		(96	)		42			(54	)		(84	)		60			(24	)		(76	)		173		97
Profit for the year from continuing operations		338			(90	)		248			300			120			420			271			221		492
Profit for the year from discontinued operations (Note 11)		9			5			14			11			32			43			36			226		262
Profit for the year attributable to equity holders of the parent		347			(85	)		262			311			152			463			307			447		754
Earnings per ordinary share (Note 9)
Continuing operations:
Basic								86.4¢									131.3¢								126.5¢
Diluted								83.8¢									127.7¢								123.3¢
Total operations:
Basic								91.3¢									144.7¢								193.8¢
Diluted								88.5¢									140.7¢								189.0¢

The Notes to the Consolidated Financial Statements are an integral part of these Financial Statements.

F-5

INTERCONTINENTAL HOTELS GROUP PLC

CONSOLIDATED STATEMENT OF RECOGNIZED INCOME AND EXPENSE

	Year ended			Year ended			Year ended
	December 31,			December 31,			December 31,
	2008			2007 restated*			2006
	($ million)
Income and expense recognized directly in equity
(Losses)/gains on valuation of available-for-sale assets		(4	)		8			29
(Losses)/gains on cash flow hedges		(14	)		(2	)		2
Exchange differences on retranslation of foreign operations		(57	)		23			152
Actuarial (losses)/gains on defined benefit pension plans, net of asset restriction		(50	)		8			(4	)
		(125	)		37			179
Transfers to the income statement
On cash flow hedges: financial expenses		2			(2	)		(2	)
On disposal of foreign operations: gain on disposal of assets		—			—			(3	)
On disposal of available-for-sale assets: other operating income and expenses		(17	)		(20	)		(26	)
		(15	)		(22	)		(31	)
Tax
Tax on items above taken directly to or transferred from equity		22			11			7
Tax related to share schemes recognized directly in equity		2			(4	)		48
		24			7			55
Net (expense)/income recognized directly in equity		(116	)		22			203
Profit for the year		262			463			754
Total recognized income and expense for the year attributable to the equity holders of the parent		146			485			957

* Restated for IFRIC 14 (see page F-11).

The Notes to the Consolidated Financial Statements are an integral part of these Financial Statements.

F-6

INTERCONTINENTAL HOTELS GROUP PLC

CONSOLIDATED BALANCE SHEET

				December 31,
	December 31,			2007
	2008			restated*
	($ million)
ASSETS
Property, plant and equipment — (Note 10)		1,684			1,934
Goodwill — (Note 12)		143			221
Intangible assets — (Note 13)		302			335
Investment in associates — (Note 14)		43			65
Retirement benefit assets — (Note 3)		40			49
Other financial assets — (Note 15)		152			188
Total non-current assets		2,364			2,792
Inventories — (Note 16)		4			6
Trade and other receivables — (Note 17)		412			472
Current tax receivable		36			109
Cash and cash equivalents — (Note 18)		82			105
Other financial assets — (Note 15)		10			18
Total current assets		544			710
Non-current assets classified as held for sale — (Note 11)		210			115
Total assets (Note 2)		3,118			3,617
LIABILITIES
Loans and other borrowings — (Note 20)		(21	)		(16	)
Trade and other payables — (Note 19)		(746	)		(784	)
Current tax payable		(374	)		(426	)
Total current liabilities		(1,141	)		(1,226	)
Loans and other borrowings — (Note 20)		(1,334	)		(1,748	)
Retirement benefit obligations — (Note 3)		(129	)		(112	)
Trade and other payables — (Note 19)		(392	)		(279	)
Deferred tax payable — (Note 25)		(117	)		(148	)
Total non-current liabilities		(1,972	)		(2,287	)
Liabilities classified as held for sale — (Note 11)		(4	)		(6	)
Total liabilities (Note 2)		(3,117	)		(3,519	)
Net assets		1			98
EQUITY
Equity share capital		118			163
Capital redemption reserve		10			10
Shares held by employee share trusts		(49	)		(83	)
Other reserves		(2,890	)		(2,918	)
Unrealized gains and losses reserve		9			38
Currency translation reserve		172			233
Retained earnings		2,624			2,649
IHG shareholders’ equity		(6	)		92
Minority equity interest — (Note 26)		7			6
Total equity		1			98

* Restated for IFRIC 14 (see page F-11).

The Notes to the Consolidated Financial Statements are an integral part of these Financial Statements.

F-7

INTERCONTINENTAL HOTELS GROUP PLC

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ FUNDS

							Retained earnings and other reserves
																Shares
	Share Capital															held by			Unrealized
	Number of									Capital						employee			gains and			Currency						Total IHG
	ordinary			Ordinary			Share			redemption			Other			share			losses			translation			Retained			shareholders’
	shares(i)			shares(i)			premium(ii)			reserve(ii)			reserves(iii)			trusts(iv)			reserve(v)			reserve(vi)			earnings			equity
	($ million, except per ordinary share amounts)
At January 1, 2006		433			74			10			2			(2,906	)		(38	)		40			60			4,628			1,870
Total recognized income and expense for the year		—			—			—			—			—			—			14			149			794			957
Issue of ordinary shares		4			1			36			—			—			—			—			—			—			37
Repurchase of shares		(28	)		(6	)		—			—			—			—			—			—			(472	)		(478	)
Share capital consolidation		(53	)		—			—			—			—			—			—			—			—			—
Transfer to capital redemption reserve		—			—			—			6			—			—			—			—			(6	)		—
Purchase of own shares by employee share trusts		—			—			—			—			—			(86	)		—			—			—			(86	)
Release of own shares by employee share trusts		—			—			—			—			—			96			—			—			(68	)		28
Equity-settled share-based cost		—			—			—			—			—			—			—			—			33			33
Equity dividends paid		—			—			—			—			—			—			—			—			(1,031	)		(1,031	)
Exchange adjustments		—			11			3			—			(8	)		(5	)		(1	)		—			—			—
At December 31, 2006		356			80			49			8			(2,914	)		(33	)		53			209			3,878			1,330
Total recognized income and expense for the year		—			—			—			—			—			—			(16	)		24			477			485
Issue of ordinary shares		4			1			31			—			—			—			—			—			—			32
Repurchase of shares		(8	)		(2	)		—			—			—			—			—			—			(160	)		(162	)
Share capital consolidation		(57	)		—			—			—			—			—			—			—			—			—
Transfer to capital redemption reserve		—			—			—			2			—			—			—			—			(2	)		—
Purchase of own shares by employee share trusts		—			—			—			—			—			(138	)		—			—			—			(138	)
Release of own shares by employee share trusts		—			—			—			—			—			89			—			—			(80	)		9
Equity-settled share-based cost		—			—			—			—			—			—			—			—			60			60
Equity dividends paid		—			—			—			—			—			—			—			—			(1,524	)		(1,524	)
Exchange adjustments		—			2			2			—			(4	)		(1	)		1			—			—			—
At December 31, 2007		295			81			82			10			(2,918	)		(83	)		38			233			2,649			92
Total recognized income and expense for the year		—			—			—			—			—			—			(29	)		(61	)		236			146
Issue of ordinary shares		—			—			2			—			—			—			—			—			—			2
Repurchase of shares		(9	)		(3	)		—			—			—			—			—			—			(136	)		(139	)
Transfer to capital redemption reserve		—			—			—			3			—			—			—			—			(3	)		—
Purchase of own shares by employee share trusts		—			—			—			—			—			(24	)		—			—			—			(24	)
Release of own shares by employee share trusts		—			—			—			—			—			39			—			—			(53	)		(14	)
Equity-settled share-based cost		—			—			—			—			—			—			—			—			49			49
Equity dividends paid		—			—			—			—			—			—			—			—			(118	)		(118	)
Exchange adjustments		—			(21	)		(23	)		(3	)		28			19			—			—			—			—
At December 31, 2008		286			57			61			10			(2,890	)		(49	)		9			172			2,624			(6	)

At December 31, 2005 the authorized share capital was £160,050,000 comprising 1,600,000,000 ordinary shares of 10 pence each and one redeemable preference share of £50,000.

The Notes to the Consolidated Financial Statements are an integral part of these Financial Statements.

F-8

(i)	The Company was incorporated and registered in England and Wales with registered number 5134420 on May 21, 2004 as a limited company under the Companies Act 1985 with the name Hackremco (No. 2154) Limited. On March 24, 2005 Hackremco (No. 2154) Limited changed its name to New InterContinental Hotels Group Limited. On April 27, 2005 New InterContinental Hotels Group Limited re-registered as a public limited company and changed its name to New InterContinental Hotels Group PLC. On June 27, 2005 New InterContinental Hotels Group PLC changed its name to InterContinental Hotels Group PLC.
	During 2004 and 2005, the Company undertook to return funds of up to £750 million to shareholders by way of three consecutive £250 million share repurchase programs, the third of which was completed in the first half of 2007. In June 2007, a further £150 million share repurchase program commenced. During the year, 9,219,325 (2007 7,724,844, 2006 28,409,753) ordinary shares were repurchased and canceled under the authorities granted by shareholders at Extraordinary General Meetings held on June 1, 2006 and 2007 and at the Annual General Meeting held on May 30, 2008.
	On June 1, 2006, shareholders approved a share capital consolidation on the basis of seven new ordinary shares for every eight existing ordinary shares. This provided for all the authorized ordinary shares of 10 pence each (whether issued or unissued) to be consolidated into new ordinary shares of 113/7 pence each. The share capital consolidation became effective on June 12, 2006.
	On June 1, 2007, shareholders approved a share capital consolidation on the basis of 47 new ordinary shares for every 56 existing ordinary shares. This provided for all the authorized ordinary shares of 113/7 pence each (whether issued or unissued) to be consolidated into new ordinary shares of 1329/47 pence each. The share capital consolidation became effective on June 4, 2007.
	Whilst the authorized share capital comprises one redeemable preference share of £50,000, following its redemption in September 2005, this redeemable preference share has not been re-issued.
	The authority given to the Company at the Annual General Meeting on May 30, 2008 to purchase its own shares was still valid at December 31, 2008. A resolution to renew the authority will be put to shareholders at the Annual General Meeting on May 29, 2009.
	At December 31, 2008, the authorized share capital was £160,050,000, comprising 1,175,000,000 ordinary shares of 1329/47 pence each and one redeemable preference share of £50,000.
(ii)	The share premium reserve and capital redemption reserve are not distributable. The share premium reserve has a balance of $61 million (2007 $82 million, 2006 $49 million) representing the amount of proceeds received for shares in excess of their nominal value. The capital redemption reserve records the nominal value of equity share capital repurchased and canceled.
(iii)	Other reserves comprises the merger and revaluation reserves previously recognized under UK GAAP, together with the reserve arising as a consequence of the Group’s capital reorganization in June 2005. Following the change in presentational currency to the US dollar (see page F-11), this reserve also includes exchange differences arising on the retranslation to period-end exchange rates of share capital, share premium, the capital redemption reserve and shares held by employee share trusts.
(iv)	The shares held by employee share trusts comprises $49.2 million (2007 $82.6 million, 2006 $33.0 million) in respect of 3.0 million (2007 3.4 million, 2006 1.7 million) InterContinental Hotels Group PLC ordinary shares held by employee share trusts, with a market value at December 31, 2008 of $25 million (2007 $60 million, 2006 $41 million).
(v)	The unrealized gains and losses reserve records movements to fair value of available-for-sale financial assets and the effective portion of the cumulative net change in the fair value of the cash flow hedging instruments related to hedged transactions that have not yet occurred. The fair value of cash flow hedging instruments outstanding at December 31, 2008 was a $10 million liability (2007 $3 million liability, 2006 $2 million asset).
(vi)	The currency translation reserve records the movement in exchange differences arising from the translation of the financial statements of foreign operations and exchange differences on foreign currency borrowings and derivative instruments that provide a hedge against net investments in foreign operations. On adoption of IFRS, cumulative exchange differences were deemed to be $nil as permitted by IFRS 1.
	During the year ended December 31, 2008, the impact of hedging net investments in foreign operations was to reduce the amount recorded in the currency translation reserve by $96 million (2007 $14 million, 2006 $7 million). The fair value of derivative instruments designated as hedges of net investments in foreign operations outstanding at December 31, 2008 was $nil (2007 $nil, 2006 $7 million net asset).

The Notes to the Consolidated Financial Statements are an integral part of these Financial Statements.

F-9

INTERCONTINENTAL HOTELS GROUP PLC

CONSOLIDATED CASH FLOW STATEMENT

	Year ended			Year ended			Year ended
	December 31,			December 31,			December 31,
	2008			2007			2006
	($ million)
Profit for the year		262			463			754
Adjustments for:
Net financial expenses		101			90			20
Income tax charge/(credit)		59			30			(76	)
Impairment		96			(6	)		(4	)
Other exceptional operating items		34			(56	)		(44	)
Gain on disposal of assets, net of tax		(5	)		(32	)		(226	)
Depreciation and amortization		112			116			118
Equity-settled share-based cost, net of payments		31			48			26
Other non-cash items		3			(4	)		—
Operating cash flow before movements in working capital		693			649			568
Decrease/(increase) in trade and other receivables		42			(30	)		(57	)
Increase/(decrease) in trade and other payables		81			52			18
Retirement benefit contributions, net of charge		(27	)		(66	)		—
Cash flows relating to exceptional operating items		(49	)		—			—
Cash flow from operations		740			605			529
Interest paid		(112	)		(84	)		(61	)
Interest received		12			18			44
Tax received/(paid) on operating activities		1			(74	)		(79	)
Net cash from operating activities		641			465			433
Cash flow from investing activities
Purchases of property, plant and equipment		(53	)		(114	)		(160	)
Purchases of intangible assets		(49	)		(40	)		(42	)
Investment in associates and other financial assets		(6	)		(32	)		(15	)
Acquisition of subsidiary, net of cash acquired		—			—			(11	)
Disposal of assets, net of costs and cash disposed of		25			97			1,140
Proceeds from associates and other financial assets		61			114			228
Tax paid on disposals		(3	)		(64	)		(11	)
Net cash from investing activities		(25	)		(39	)		1,129
Cash flow from financing activities
Proceeds from the issue of share capital		2			32			37
Purchase of own shares		(139	)		(162	)		(478	)
Purchase of own shares by employee share trusts		(22	)		(138	)		(86	)
Proceeds on release of own shares by employee share trusts		2			21			35
Dividends paid to shareholders		(118	)		(1,524	)		(1,031	)
Dividends paid to minority interests		—			—			(2	)
(Decrease)/increase in borrowings		(316	)		1,108			(316	)
Net cash from financing activities		(591	)		(663	)		(1,841	)
Net movement in cash and cash equivalents in the year		25			(237	)		(279	)
Cash and cash equivalents at beginning of the year		105			351			559
Exchange rate effects		(48	)		(9	)		71
Cash and cash equivalents at end of the year		82			105			351

The Notes to the Consolidated Financial Statements are an integral part of these Financial Statements.

F-10

Note 1 — Accounting Policies

General information

The consolidated financial statements of InterContinental Hotels Group PLC (the “Group” or “IHG”) for the year ended December 31, 2008 were authorized for issue in accordance with a resolution of the Directors on February 16, 2009. InterContinental Hotels Group PLC is incorporated in Great Britain and registered in England and Wales.

Summary of significant accounting policies

Basis of preparation

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and in accordance with IFRS as adopted by the European Union (“EU”), and in accordance with the provisions of the Companies Act 1985. IFRS as adopted by the EU differs in certain respects from IFRS as issued by the IASB, however, the differences have no impact on the Group’s consolidated financial statements for the years presented.

The Group early adopted International Financial Reporting Interpretations Committee Interpretation 14 “IAS 19 -The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction” (“IFRIC 14”) for the first time at December 31, 2007. IFRIC 14 provides guidance on assessing the limit in International Accounting Standard 19 “Employee Benefits” (“IAS 19”) on the amount of the surplus that can be recognized as an asset. The December 31, 2007 balance sheet has subsequently been restated to show the retirement benefit assets net of tax of $17 million previously recorded within deferred tax payable. There have been corresponding changes of $17 million to the actuarial gains and related tax reported in the restated Consolidated Statement of Recognized Income and Expense for the year December 31, 2007. There is no change to previously reported net assets or income.

Other new accounting standards and interpretations issued by the IASB and the International Financial Reporting Interpretations Committee (“IFRIC”), becoming effective during the year, have not had a material impact on the Group’s financial statements.

Change in presentational currency

The consolidated financial statements are presented in US dollars following a management decision to change the reporting currency from sterling during the year. The change has been made to reflect the profile of the Group’s revenue and operating profit which are now primarily generated in US dollars or US dollar-linked currencies. All comparative information has been restated into US dollars and values are rounded to the nearest million ($m) except where otherwise indicated. Dividends are now determined in US dollars and converted into sterling immediately before announcement.

The currency translation reserve was set to nil at January 1, 2004 on transition to IFRS and this reserve has been re-presented on the basis that the Group has reported in US dollars since this date. Equity share capital, the capital redemption reserve and shares held by employee share trusts are translated into US dollars at the rates of exchange on the balance sheet date; the resultant exchange differences are recorded in other reserves.

Basis of consolidation

The consolidated financial statements comprise the financial statements of the parent company and entities controlled by the Group. All intra group balances and transactions have been eliminated.

The results of those businesses acquired or disposed of are consolidated for the period during which they were under the Group’s control.

Foreign currencies

Transactions in foreign currencies are translated to the functional currency at the exchange rates ruling on the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are retranslated to the

F-11

functional currency at the relevant rates of exchange ruling at the balance sheet date. All foreign exchange differences arising on translation are recognized in the income statement except on foreign currency borrowings that provide a hedge against a net investment in a foreign operation. These are taken directly to the currency translation reserve until the disposal of the net investment, at which time they are recycled against the gain or loss on disposal.

The assets and liabilities of foreign operations, including goodwill, are translated into US dollars at the relevant rates of exchange ruling at the balance sheet date. The revenues and expenses of foreign operations are translated into US dollars at average rates of exchange for the period. The exchange differences arising on the retranslation are taken directly to the currency translation reserve. On disposal of a foreign operation, the cumulative amount recognized in the currency translation reserve relating to that particular foreign operation is recycled against the gain or loss on disposal.

Derivative financial instruments and hedging

Derivatives designated as hedging instruments are accounted for in line with the nature of the hedging arrangement. The Group’s detailed accounting policies with respect to hedging instruments are set out in Note 21. Documentation outlining the measurement and effectiveness of the hedging arrangement is maintained throughout the life of the hedge relationship. Any ineffective element of a hedge arrangement is recognized in financial income or expense.

Interest arising from currency swap agreements is taken to financial income or expense on a gross basis over the term of the relevant agreements. Interest arising from other currency derivatives and interest rate swaps is taken to financial income or expense on a net basis over the term of the agreement.

Foreign exchange gains and losses on currency derivatives are recognized in financial income and expense unless they form part of effective hedge relationships.

The fair value of derivatives is calculated by discounting the expected future cash flows at prevailing interest rates.

Property, plant and equipment

Property, plant and equipment are stated at cost less depreciation and any impairment.

Borrowing costs are not capitalized but will be, if material, from January 1, 2009, on adoption of the amendment to IAS 23 “Borrowing costs.”

Repairs and maintenance costs are expensed as incurred.

Land is not depreciated. All other property, plant and equipment are depreciated to a residual value over their estimated useful lives, namely:

Buildings	lesser of 50 years and unexpired term of lease; and
Fixtures, fittings and equipment	three to 25 years.

All depreciation is charged on a straight-line basis. Residual value is reassessed annually.

Property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. Assets that do not generate independent cash flows are combined into cash-generating units. If carrying values exceed estimated recoverable amount, the assets or cash-generating units are written down to their recoverable amount. Recoverable amount is the greater of fair value less costs to sell and value in use. Value in use is assessed based on estimated future cash flows discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

On adoption of IFRS, the Group retained previous revaluations of property, plant and equipment at deemed cost as permitted by IFRS 1 “First-time Adoption of International Financial Reporting Standards.”

F-12

Goodwill

Goodwill arises on consolidation and is recorded at cost, being the excess of the cost of acquisition over the fair value at the date of acquisition of the Group’s share of identifiable assets, liabilities and contingent liabilities. Following initial recognition, goodwill is measured at cost less any accumulated impairment losses.

Goodwill is tested for impairment at least annually by comparing carrying values of cash-generating units with their recoverable amounts.

Intangible assets

Software

Acquired software licenses and software developed in-house are capitalized on the basis of the costs incurred to acquire and bring to use the specific software. Costs are amortized over estimated useful lives of three to five years on a straight-line basis.

Management contracts

When assets are sold and a purchaser enters into a management or franchise contract with the Group, the Group capitalizes as part of the gain or loss on disposal an estimate of the fair value of the contract entered into. The value of management contracts is amortized over the life of the contract which ranges from six to 50 years on a straight-line basis.

Other intangible assets

Amounts paid to hotel owners to secure management contracts and franchise agreements are capitalized and amortized over the shorter of the contracted period and 10 years on a straight-line basis.

Internally generated development costs are expensed unless forecast revenues exceed attributable forecast development costs, at which time they are capitalized and amortized over the life of the asset.

Intangible assets are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.

Associates

An associate is an entity over which the Group has the ability to exercise significant influence, but not control, through participation in the financial and operating policy decisions of the entity.

Associates are accounted for using the equity method unless the associate is classified as held for sale. Under the equity method, the Group’s investment is recorded at cost adjusted by the Group’s share of post-acquisition profits and losses. When the Group’s share of losses exceeds its interest in an associate, the Group’s carrying amount is reduced to $nil and recognition of further losses is discontinued except to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of an associate.

Financial assets

The Group classifies its financial assets into one of the two following categories: loans and receivables or available-for-sale financial assets. Management determines the classification on initial recognition and they are subsequently held at amortized cost (loans and receivables) or fair value (available-for-sale financial assets). Interest on loans and receivables is calculated using the effective interest rate method and is recognized in the income statement as interest income. Changes in fair values of available-for-sale financial assets are recorded directly in equity within the unrealized gains and losses reserve. On disposal, the accumulated fair value adjustments recognized in equity are recycled to the income statement. Dividends from available-for-sale financial assets are recognized in the income statement as operating income and expenses.

F-13

Financial assets are tested for impairment at each balance sheet date. If an available-for-sale financial asset is impaired, the difference between original cost and fair value is transferred from equity to the income statement to the extent of any cumulative loss recorded in equity, with any excess charged directly to the income statement.

Financial liabilities

Financial liabilities are measured at amortized cost using the effective interest rate method. A financial liability is derecognized when the obligation under the liability expires, is discharged or canceled.

Inventories

Inventories are stated at the lower of cost and net realizable value.

Trade receivables

Trade receivables are recorded at their original amount less provision for impairment. It is the Group’s policy to provide for 100% of the previous month’s aged receivables balances which are more than 180 days past due. Adjustments to the policy may be made due to specific or exceptional circumstances when collection is no longer considered probable. The carrying amount of the receivable is reduced through the use of a provision account and movements in the provision are recognized in the income statement within cost of sales. When a previously provided trade receivable is uncollectable, it is written off against the provision.

Cash and cash equivalents

Cash comprises cash in hand and demand deposits.

Cash equivalents are short-term highly liquid investments with an original maturity of three months or less that are readily convertible to known amounts of cash and subject to insignificant risk of changes in value.

In the cash flow statement cash and cash equivalents are shown net of short-term overdrafts which are repayable on demand and form an integral part of the Group’s cash management.

Assets held for sale

Non-current assets and associated liabilities are classified as held for sale when their carrying amount will be recovered principally through a sale transaction rather than continuing use and a sale is highly probable.

Assets designated as held for sale are held at the lower of carrying amount at designation and fair value less costs to sell.

Depreciation is not charged against property, plant and equipment classified as held for sale.

Trade payables

Trade payables are non-interest-bearing and are stated at their nominal value.

Loyalty program

The hotel loyalty program, Priority Club Rewards (“PCR”), enables members to earn points, funded through hotel assessments, during each stay at an IHG branded hotel and redeem the points at a later date for free accommodation or other benefits. The future redemption liability is included in trade and other payables and is estimated using eventual redemption rates determined by actuarial methods and points values.

The Group pays interest to the loyalty program on the accumulated cash received in advance of redemption of the points awarded.

F-14

Self insurance

The Group is self-insured for various insurable risks including general liability, workers’ compensation and employee medical and dental coverage. Insurance reserves include projected settlements for known and incurred but not reported claims. Projected settlements are estimated based on historical trends and actuarial data.

Provisions

Provisions are recognized when the Group has a present obligation as a result of a past event, it is probable that a payment will be made and a reliable estimate of the amount payable can be made. If the effect of the time value of money is material, the provision is discounted.

Bank and other borrowings

Bank and other borrowings are initially recognized at the fair value of the consideration received less directly attributable transaction costs. They are subsequently measured at amortized cost. Finance charges, including issue costs, are charged to the income statement using an effective interest rate method.

Borrowings are classified as non-current when the repayment date is more than 12 months from the balance sheet date or where they are drawn on a facility with more than 12 months to expiry.

Retirement benefits

Defined contribution plans

Payments to defined contribution schemes are charged to the income statement as they fall due.

Defined benefit plans

Plan assets are measured at fair value and plan liabilities are measured on an actuarial basis, using the projected unit credit method and discounting at an interest rate equivalent to the current rate of return on a high quality corporate bond of equivalent currency and term to the plan liabilities. The difference between the value of plan assets and liabilities at the balance sheet date is the amount of surplus or deficit recorded on the balance sheet as an asset or liability. An asset is recognized when the employer has an unconditional right to use the surplus at some point during the life of the plan or on its wind up. If a refund would be subject to a tax other than income tax, as is the case in the United Kingdom, the asset is recorded at the amount net of tax.

The service cost of providing pension benefits to employees for the year is charged to the income statement. The cost of making improvements to pensions is recognized in the income statement on a straight-line basis over the period during which any increase in benefits vests. To the extent that improvements in benefits vest immediately, the cost is recognized immediately as an expense.

Actuarial gains and losses may result from: differences between the expected return and the actual return on plan assets; differences between the actuarial assumptions underlying the plan liabilities and actual experience during the year; or changes in the actuarial assumptions used in the valuation of the plan liabilities. Actuarial gains and losses, and taxation thereon, are recognized in the Consolidated Statement of Recognized Income and Expense.

Actuarial valuations are normally carried out every three years and are updated for material transactions and other material changes in circumstances (including changes in market prices and interest rates) up to the balance sheet date.

F-15

Taxes

Current tax

Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the tax authorities including interest. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance sheet date.

Deferred tax

Deferred tax assets and liabilities are recognized in respect of temporary differences between the tax base and carrying value of assets and liabilities, including accelerated capital allowances, unrelieved tax losses, unremitted profits from overseas where the Group does not control remittance, gains rolled over into replacement assets, gains on previously revalued properties and other short-term temporary differences.

Deferred tax assets are recognized to the extent that it is regarded as probable that the deductible temporary differences can be realized. The recoverability of all deferred tax assets is reassessed at each balance sheet date.

Deferred tax is calculated at the tax rates that are expected to apply in the periods in which the asset or liability will be settled, based on rates enacted or substantively enacted at the balance sheet date.

Revenue recognition

Revenue is derived from the following sources: owned and leased properties; management fees; franchise fees and other revenues which are ancillary to the Group’s operations, including technology fee income.

Generally, revenue represents sales (excluding VAT and similar taxes) of goods and services, net of discounts, provided in the normal course of business and recognized when services have been rendered. The following is a description of the composition of revenues of the Group.

Owned and leased — primarily derived from hotel operations, including the rental of rooms and food and beverage sales from owned and leased hotels operated under the Group’s brand names. Revenue is recognized when rooms are occupied and food and beverages are sold.

Management fees — earned from hotels managed by the Group, usually under long-term contracts with the hotel owner. Management fees include a base fee, which is generally a percentage of hotel revenue, and an incentive fee, which is generally based on the hotel’s profitability or cash flows. Revenue is recognized when earned and realized or realizable under the terms of the contract.

Franchise fees — received in connection with the license of the Group’s brand names, usually under long-term contracts with the hotel owner. The Group charges franchise royalty fees as a percentage of room revenue. Revenue is recognized when earned and realized or realizable under the terms of the agreement.

Share-based payments

The cost of equity-settled transactions with employees is measured by reference to fair value at the date at which the shares are granted. Fair value is determined by an external valuer using option pricing models.

The cost of equity-settled transactions is recognized, together with a corresponding increase in equity, over the period in which any performance or other conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (vesting date).

The income statement charge for a period represents the movement in cumulative expense recognized at the beginning and end of that period. No expense is recognized for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition, which are treated as vesting irrespective of whether or not the market condition is satisfied, provided that all other performance conditions are satisfied.

The Group has taken advantage of the transitional provisions of IFRS 2 “Share-based Payments” in respect of equity-settled awards and has applied IFRS 2 only to equity-settled awards granted after November 7, 2002 that had not vested before January 1, 2005.

F-16

Leases

Operating lease rentals are charged to the income statement on a straight-line basis over the term of the lease.

Assets held under finance leases, which transfer to the Group substantially all the risks and benefits incidental to ownership of the leased item, are capitalized at the inception of the lease, with a corresponding liability being recognized for the fair value of the leased asset or, if lower, the present value of the minimum lease payments. Lease payments are apportioned between the reduction of the lease liability and finance charges in the income statement so as to achieve a constant rate of interest on the remaining balance of the liability. Assets held under finance leases are depreciated over the shorter of the estimated useful life of the asset and the lease term.

Disposal of non-current assets

The Group recognizes the sales proceeds and related gain or loss on disposal on completion of the sales process. In determining whether the gain or loss should be recorded, the Group considers whether it:

•  has a continuing managerial involvement to the degree associated with asset ownership;

•  has transferred the significant risks and rewards associated with asset ownership; and

•  can reliably measure and will actually receive the proceeds.

Discontinued operations

Discontinued operations are those relating to hotels sold or those classified as held for sale when the results relate to a separate line of business, geographical area of operations, or where there is a co-ordinated plan to dispose of a separate line of business or geographical area of operations.

Exceptional items

The Group discloses certain financial information both including and excluding exceptional items. The presentation of information excluding exceptional items allows a better understanding of the underlying trading performance of the Group and provides consistency with the Group’s internal management reporting. Exceptional items are identified by virtue of either their size or nature so as to facilitate comparison with prior periods and to assess underlying trends in financial performance. Exceptional items can include, but are not restricted to, gains and losses on the disposal of assets, impairment charges and reversals, restructuring costs and the release of tax provisions.

Use of accounting estimates and judgments

The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from these estimates under different assumptions and conditions.

The estimates and assumptions that have the most significant effect on the amounts recognized in the financial statements are:

•  Impairment — the Group determines whether goodwill is impaired on an annual basis or more frequently if there are indicators of impairment. Other non-current assets, including property, plant and equipment, are tested for impairment if there are indicators of impairment. Impairment testing requires an estimate of future cash flows and the choice of a suitable discount rate and, in the case of hotels, an assessment of recoverable amount based on comparable market transactions.

•  Retirement and other post-employment benefits — the cost of defined benefit pension plans and other post-employment benefits is determined using actuarial valuations. The actuarial valuation involves making assumptions about discount rates, expected rates of return on assets, future salary increases, mortality rates and future pension increases.

F-17

•  Tax — provisions for tax accruals require judgments on the interpretation of tax legislation, developments in tax case law and the potential outcomes of tax audits and appeals. In addition, deferred tax assets are recognized for unused tax attributes to the extent that it is probable that taxable profit will be available against which they can be utilized. Judgment is required as to the amount that can be recognized based on the likely amount and timing of future taxable profits, taking into account expected tax planning. Deferred tax balances are dependent on management’s expectations regarding the manner and timing of recovery of the related assets.

•  Loyalty program — the future redemption liability included in trade and other payables is estimated using actuarial methods based on statistical formulae that project the timing of future point redemptions based on historical levels to give eventual redemption rates.

•  Trade receivables — a provision for impairment of trade receivables is made on the basis of historical experience and other factors considered relevant by management.

•  Other — the Group also makes estimates and judgments in the valuation of management and franchise agreements acquired on asset disposals, the valuation of financial assets classified as available-for-sale, the outcome of legal proceedings and claims and in the valuation of share-based payment costs.

New standards and interpretations

The IASB and IFRIC issued the following standards and interpretations with an effective date after the date of these financial statements. They have not been adopted early by the Group and will be adopted in accordance with the effective date. The Directors do not anticipate that the adoption of these standards and interpretations will have a material impact on the Group’s reported income or net assets in the period of adoption.

IFRS 2	Share-based Payment (Amendment) Effective from January 1, 2009
IFRS 3R	Business Combinations Effective from July 1, 2009
IFRS 5	Non-current Assets Held for Sale and Discontinued Operations (Amendment) Effective from July 1, 2009
IFRS 8	Operating Segments Effective from January 1, 2009
IAS 1	Presentation of Financial Statements (Amendment) Effective from January 1, 2009
IAS 23	Borrowing Costs (Amendment) Effective from January 1, 2009
IAS 27R	Consolidated and Separate Financial Statements Effective from July 1, 2009.
IFRIC 13	Customer Loyalty Programmes Effective from July 1, 2008.
IFRIC 16	Hedges of a Net Investment in a Foreign Operation Effective from October 1, 2008.

Note: the effective dates are in respect of accounting periods beginning on or after the date shown.

F-18

Note 2 — Exchange Rates and Segmental Information

Exchange Rates

The results of operations have been translated into US dollars at the average rates of exchange for the year. In the case of sterling, the translation rate is $1 = £0.55 (2007 $1 = £0.50, 2006 $1 = £0.54). In the case of the euro, the translation rate is $1 = €0.68 (2007 $1 = €0.73, 2006 $1 = €0.80).

Assets and liabilities have been translated into US dollars at the rates of exchange on the balance sheet date. In the case of sterling, the translation rate is $1 = £0.69 (2007 $1 = £0.50, 2006 $1 = £0.51). In the case of the euro, the translation rate is $1 = €0.71 (2007 $1 = €0.68, 2006 $1 = €0.76).

Segmental Information

The primary segmental reporting format is determined to be three main geographical regions:

Americas;

Europe, the Middle East and Africa (“EMEA”); and

Asia Pacific.

These, together with Central functions, form the principal format by which management is organized and makes operational decisions. Central functions include costs of global functions including technology, sales and marketing, finance, human resources and corporate services; revenue arises principally from technology fee income.

The Group further breaks each geographical region into three distinct business models which offer different growth, return, risk and reward opportunities:

Franchised

Where the Group neither owns nor manages the hotel, but licenses the use of a Group brand and provides access to reservation systems, loyalty schemes, and know-how. The Group derives revenues from a brand royalty or licensing fee, based on a percentage of room revenue.

Managed

Where, in addition to licensing the use of a Group brand, the Group manages the hotel for third-party owners. The Group derives revenues from base and incentive management fees and provides the system infrastructure necessary for the hotel to operate. Management contract fees are generally a percentage of hotel revenue and may have an additional incentive fee linked to profitability or cash flow. The terms of these agreements vary, but are often long-term (for example, 10 years or more). The Group’s responsibilities under the management agreement typically include hiring, training and supervising the managers and employees that operate the hotels under the relevant brand standards. In order to gain access to central reservation systems, global and regional brand marketing and brand standards and procedures, owners are typically required to make a further contribution.

Owned and leased

Where the Group both owns (or leases) and operates the hotel and, in the case of ownership, takes all the benefits and risks associated with ownership.

Segmental results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

F-19

Segmental Information

Year ended December 31, 2008

Revenue

					Asia
	Americas		EMEA		Pacific		Central		Total
	($ million)
Owned and leased		257		240		159		—		656
Managed		168		168		113		—		449
Franchised		495		110		18		—		623
Central		—		—		—		126		126
Continuing operations		920		518		290		126		1,854
Discontinued operations — owned and leased		43		—		—		—		43
		963		518		290		126		1,897

Segmental result

							Asia
	Americas			EMEA			Pacific			Central			Total
	($ million)
Owned and leased		41			45			43			—			129
Managed		51			95			55			—			201
Franchised		426			75			8			—			509
Regional and central		(67	)		(44	)		(38	)		(155	)		(304	)
Continuing operations		451			171			68			(155	)		535
Exceptional operating items		(99	)		(21	)		(2	)		(10	)		(132	)
Operating profit		352			150			66			(165	)		403
Discontinued operations — owned and leased		14			—			—			—			14
		366			150			66			(165	)		417

	Continuing			Discontinued			Total
	($ million)
Operating profit before exceptional items		535			14			549
Exceptional operating items		(132	)		—			(132	)
Operating profit		403			14			417
Net finance costs		(101	)		—			(101	)
Profit before tax		302			14			316
Tax		(54	)		(5	)		(59	)
Profit after tax		248			9			257
Gain on disposal of assets, net of tax		—			5			5
Profit for the year		248			14			262

F-20

Year ended December 31, 2008

Assets and liabilities

							Asia
	Americas			EMEA			Pacific			Central		Total
	($ million)
Segment assets		1,031			957			613			189		2,790
Non-current assets classified as held for sale		209			1			—			—		210
		1,240			958			613			189		3,000
Unallocated assets:
Current tax receivable													36
Cash and cash equivalents													82
Total assets													3,118
Segment liabilities		(638	)		(470	)		(159	)		—		(1,267	)
Liabilities classified as held for sale		(4	)		—			—			—		(4	)
		(642	)		(470	)		(159	)		—		(1,271	)
Unallocated liabilities:
Current tax payable													(374	)
Deferred tax payable													(117	)
Loans and other borrowings													(1,355	)
Total liabilities													(3,117	)

Other segmental information

					Asia
	Americas		EMEA		Pacific		Central		Total
	($ million)
Continuing operations:
Capital expenditure(i)		12		7		13		76		108
Additions to:
Property, plant and equipment		43		2		10		36		91
Intangible assets		7		—		2		40		49
Depreciation and amortization(ii)		31		35		26		20		112
Impairment losses		75		21		—		—		96
Reversal of previously recorded impairment

(i)	Comprises purchases of property, plant and equipment, intangible assets and associates and other financial assets and acquisitions of subsidiaries as included in the Consolidated Cash Flow Statement.
(ii)	Included in the $112 million of depreciation and amortization is $32 million relating to administrative expenses and $80 million relating to cost of sales.

F-21

Segmental Information

Year ended December 31, 2007

Revenue

					Asia
	Americas		EMEA		Pacific		Central		Total
	($ million)
Owned and leased		257		244		145		—		646
Managed		156		167		99		—		422
Franchised		489		81		16		—		586
Central		—		—		—		117		117
Continuing operations		902		492		260		117		1,771
Discontinued operations — owned and leased		62		17		—		—		79
		964		509		260		117		1,850

Segmental result

							Asia
	Americas			EMEA			Pacific			Central			Total
	($ million)
Owned and leased		40			33			36			—			109
Managed		41			87			46			—			174
Franchised		425			58			6			—			489
Regional and central		(66	)		(44	)		(25	)		(163	)		(298	)
Continuing operations		440			134			63			(163	)		474
Exceptional operating items		17			21			17			5			60
Operating profit		457			155			80			(158	)		534
Discontinued operations — owned and leased		16			1			—			—			17
		473			156			80			(158	)		551

	Continuing			Discontinued			Total
	($ million)
Operating profit before exceptional items		474			17			491
Exceptional operating items		60			—			60
Operating profit		534			17			551
Net finance costs		(90	)		—			(90	)
Profit before tax		444			17			461
Tax		(24	)		(6	)		(30	)
Profit after tax		420			11			431
Gain on disposal of assets, net of tax		—			32			32
Profit for the year		420			43			463

F-22

Year ended December 31, 2007*

Assets and liabilities

							Asia
	Americas			EMEA			Pacific			Central		Total
	($ million)
Segment assets		1,233			1,216			672			167		3,288
Non-current assets classified as held for sale		115			—			—			—		115
		1,348			1,216			672			167		3,403
Unallocated assets:
Current tax receivable													109
Cash and cash equivalents													105
Total assets													3,617
Segment liabilities		(562	)		(477	)		(136	)		—		(1,175	)
Liabilities classified as held for sale		(6	)		—			—			—		(6	)
		(568	)		(477	)		(136	)		—		(1,181	)
Unallocated liabilities:
Current tax payable													(426	)
Deferred tax payable													(148	)
Loans and other borrowings													(1,764	)
Total liabilities													(3,519	)

Other segmental information

					Asia
	Americas		EMEA		Pacific		Central		Total
	($ million)
Continuing operations:
Capital expenditure(i)		57		41		40		46		184
Additions to:
Property, plant and equipment		32		28		28		20		108
Intangible assets		9		9		6		26		50
Depreciation and amortization(ii)		33		35		22		23		113
Reversal of previously recorded impairment		—		—		6		—		6
Discontinued operations:
Capital expenditure(i)		1		1		—		—		2
Depreciation and amortization(ii)		1		2		—		—		3

* Restated for IFRIC 14 (see page F-11).

(i)	Comprises purchases of property, plant and equipment, intangible assets and associates and other financial assets as included in the Consolidated Cash Flow Statement.
(ii)	Included in the $116 million of depreciation and amortization is $35 million relating to administrative expenses and $81 million relating to cost of sales.

F-23

Segmental Information

Year ended December 31, 2006

Revenue

					Asia
	Americas		EMEA		Pacific		Central		Total
	($ million)
Owned and leased		192		169		131		—		492
Managed		143		131		65		—		339
Franchised		443		63		8		—		514
Central		—		—		—		101		101
Continuing operations		778		363		204		101		1,446
Discontinued operations — owned and leased		74		245		—		—		319
		852		608		204		101		1,765

Segmental result

	Americas			EMEA			Asia Pacific			Central			Total
	($ million)
Owned and leased		22			(7	)		31			—			46
Managed		50			68			39			—			157
Franchised		382			44			5			—			431
Regional and central		(59	)		(36	)		(23	)		(149	)		(267	)
Continuing operations		395			69			52			(149	)		367
Exceptional operating items		44			4			—			—			48
Operating profit		439			73			52			(149	)		415
Discontinued operations — owned and leased		12			45			—			—			57
		451			118			52			(149	)		472

	Continuing			Discontinued			Total
	($ million)
Operating profit before exceptional items		367			57			424
Exceptional operating items		48			—			48
Operating profit		415			57			472
Net finance costs		(20	)		—			(20	)
Profit before tax		395			57			452
Tax		97			(21	)		76
Profit after tax		492			36			528
Gain on disposal of assets, net of tax		—			226			226
Profit for the year		492			262			754

F-24

Year ended December 31, 2006

Other segmental information

					Asia
	Americas		EMEA		Pacific		Central		Total
	($ million)
Continuing operations:
Capital expenditure(i)		62		90		31		28		211
Additions to:
Property, plant and equipment		213		97		16		7		333
Intangible assets		18		57		2		20		97
Depreciation and amortization(ii)		28		31		19		24		102
Reversal of previously recorded impairment		—		4		—		—		4
Discontinued operations:
Capital expenditure(i)		2		15		—		—		17
Additions to property, plant and equipment		—		7		—		—		7
Depreciation and amortization(ii)		7		9		—		—		16
Impairment of assets held for sale		5		—		—		—		5

(i)	Comprises purchases of property, plant and equipment, intangible assets and other financial assets and acquisitions of subsidiaries as included in the Consolidated Cash Flow Statement.
(ii)	Included in the $118 million of depreciation and amortization is $39 million relating to administrative expenses and $79 million relating to cost of sales.

Note 3 — Staff costs and Directors’ emoluments

Staff

	Year ended December 31,
	2008		2007		2006
	($ million)
Costs:
Wages and salaries		588		586		553
Social security costs		55		61		70
Pension and other post-retirement benefits:
Defined benefit plans		8		8		11
Defined contribution plans		30		25		20
		681		680		654

Average number of employees, including part-time employees:

	Year ended December 31,
	2008		2007		2006
	(Number)
Americas		3,570		3,761		3,771
EMEA		2,012		2,249		3,940
Asia Pacific		1,481		1,514		1,252
Central		1,271		1,150		1,023
		8,334		8,674		9,986

The costs of the above employees are borne by IHG. In addition, the Group employs 4,037 (2007 3,695, 2006 3,543) people who work in managed hotels or directly on behalf of the system funds and whose costs of $235 million (2007 $216 million, 2006 $198 million) are borne by those hotels or by the funds.

F-25

Retirement benefits

Retirement and death in service benefits are provided for eligible employees in the United Kingdom principally by the InterContinental Hotels UK Pension Plan. The plan, which is funded and HM Revenue & Customs registered, covers approximately 460 (2007 440, 2006 410) employees, of which 170 (2007 200, 2006 220) are in the defined benefit section which provides pensions based on final salaries and 290 (2007 240, 2006 190) are in the defined contribution section. The defined benefit section of the plan closed to new entrants during 2002 with new members provided with defined contribution arrangements. The assets of the plan are held in self-administered trust funds separate from the Group’s assets. In addition, there are unfunded UK pension arrangements for certain members affected by the lifetime allowance. The Group also maintains the following US-based defined benefit plans; the funded InterContinental Hotels Pension Plan, unfunded InterContinental Hotels non-qualified pension plans and post-employment benefits schemes. These plans are now closed to new members. The Group also operates a number of minor pension schemes outside the United Kingdom, the most significant of which is a defined contribution scheme in the United States; there is no material difference between the pension costs of, and contributions to, these schemes.

The amounts recognized in the Consolidated Income Statement in respect of the defined benefit plans are:

																			Post-
	Pension plans																		employment
	UK									US and other									benefits						Total
Recognized in administrative expenses	2008			2007			2006			2008			2007			2006			2008		2007		2006		2008			2007			2006
	($ million)
Current service costs		9			10			9			1			—			—			—		—		—		10			10			9
Interest cost on benefit obligation		30			30			24			10			10			9			1		1		2		41			41			35
Expected return on plan assets		(32	)		(34	)		(26	)		(11	)		(9	)		(7	)		—		—		—		(43	)		(43	)		(33	)
		7			6			7			—			1			2			1		1		2		8			8			11

The amounts recognized in the Consolidated Statement of Recognized Income and Expenses are:

	Pension plans																		Post-employment
	UK									US and other									benefits						Total
Actuarial gains and losses	2008			2007*			2006			2008			2007			2006			2008		2007		2006		2008			2007*			2006
	($ million)
Actual return on plan assets		(25	)		28			39			(27	)		9			11			—		—		—		(52	)		37			50
Less: expected return on plan assets		(32	)		(34	)		(26	)		(11	)		(9	)		(7	)		—		—		—		(43	)		(43	)		(33	)
		(57	)		(6	)		13			(38	)		—			4			—		—		—		(95	)		(6	)		17
Other actuarial gains and losses		55			31			(22	)		3			—			—			1		—		1		59			31			(21	)
Total actuarial gains and losses		(2	)		25			(9	)		(35	)		—			4			1		—		1		(36	)		25			(4	)
Asset restriction**		(14	)		(17	)		—			—			—			—			—		—		—		(14	)		(17	)		—
		(16	)		8			(9	)		(35	)		—			4			1		—		1		(50	)		8			(4	)

 * Restated for IFRIC 14 (see page F-11).

** Relates to tax that would be deducted at source in respect of a refund of the surplus.

F-26

The assets and liabilities of the schemes and the amounts recognized in the balance sheet are:

													Post-
	Pension plans												employment
	UK						US and other						benefits						Total
	2008			2007*			2008			2007			2008			2007			2008			2007*
	($ million)
Schemes in surplus
Fair value of plan assets		437			611			16			15			—			—			453			626
Present value of benefit obligations		(377	)		(550	)		(13	)		(10	)		—			—			(390	)		(560	)
Surplus in schemes		60			61			3			5			—			—			63			66
Asset restrictions**		(23	)		(17	)		—			—			—			—			(23	)		(17	)
Retirement benefit assets		37			44			3			5			—			—			40			49
Schemes in deficit
Fair value of plan assets		—			—			96			129			—			—			96			129
Present value of benefit obligations		(34	)		(47	)		(172	)		(174	)		(19	)		(20	)		(225	)		(241	)
Retirement benefit obligations		(34	)		(47	)		(76	)		(45	)		(19	)		(20	)		(129	)		(112	)
Total fair value of plan assets		437			611			112			144			—			—			549			755
Total present value of benefit obligations		(411	)		(597	)		(185	)		(184	)		(19	)		(20	)		(615	)		(801	)

 * Restated for IFRIC 14 (see page F-11).

** Relates to tax that would be deducted at source in respect of a refund of the surplus.

The “US and other” surplus of $3 million relates to a defined benefit pension scheme in Hong Kong. Included within the “US and other” deficit is $1 million relating to a defined benefit pension plan in the Netherlands.

Assumptions

The principal financial assumptions used by the actuaries to determine the benefit obligation are:

	Pension plans												Post-employment
	UK						US						benefits
	2008		2007		2006		2008		2007		2006		2008		2007		2006
	(%)
Wages and salaries increases		4.5		4.9		4.6		—		—		—		4.0		4.0		4.0
Pensions increases		3.0		3.4		3.1		—		—		—		—		—		—
Discount rate		5.6		5.5		5.0		6.2		5.8		5.8		6.2		5.8		5.8
Inflation rate		3.0		3.4		3.1		—		—		—		—		—		—
Healthcare cost trend rate assumed for next year														9.5		10.0		10.0
Ultimate rate that the cost trend rate trends to														5.0		5.0		5.0

Mortality is the most significant demographic assumption. In respect of the UK plans, the specific mortality rates used are in line with the PA92 medium cohort tables, with age rated down by one year, implying the following life expectancies at retirement. In the US, life expectancy is determined by reference to the RP-2000 healthy tables.

	Pension plans
	UK						US
	2008		2007		2006		2008		2007		2006
	(Years)
Current pensioners at 65 — male(i)		23		23		23		18		18		18
Current pensioners at 65 — female(i)		26		26		26		20		20		20
Future pensioners at 65 — male(ii)		24		24		24		18		18		18
Future pensioners at 65 — female(ii)		27		27		27		20		20		20

(i)	Relates to assumptions based on longevity (in years) following retirement at the balance sheet date.
(ii)	Relates to assumptions based on longevity (in years) relating to an employee retiring in 2028.

F-27

The assumptions allow for expected increases in longevity.

Sensitivities

The value of scheme assets is sensitive to market conditions, particularly equity values. Changes in assumptions used for determining retirement benefit costs and obligations may have a material impact on the income statement and the balance sheet. The main assumptions are the discount rate, the rate of inflation and the assumed mortality rate. The following table provides an estimate of the potential impact of each of these variables on the pension plans.

	UK						US
	Higher/			Increase/			Higher/		Increase/
	(lower)			(decrease)			(lower)		(decrease)
	pension cost			in liabilities			pension cost		in liabilities
	($ million)
Discount rate — 0.25% decrease		0.6			21.7			—		4.8
Discount rate — 0.25% increase		(0.4	)		(20.5	)		—		(4.6	)
Inflation rate — 0.25% increase		1.3			20.4			—		—
Inflation rate — 0.25% decrease		(1.2	)		(19.2	)		—		—
Mortality rate — one year increase		0.6			7.9			—		6.1

In 2018, the healthcare cost trend rate reaches the assumed ultimate rate. A one percentage point increase/(decrease) in assumed healthcare costs trend rate would increase/(decrease) the accumulated post-employment benefit obligations as of December 31, 2008, by approximately $1.7 million (2007 $1.9 million) and would increase/(decrease) the total of the service and interest cost components of net post-employment healthcare cost for the period then ended by approximately $0.1 million (2007 $0.1 million).

													Post-
	Pension plans												employment
	UK						US and other						benefits						Total
Movement in benefit obligation	2008			2007			2008			2007			2008			2007			2008			2007
	($ million)
Benefit obligation at beginning of year		597			585			184			175			20			20			801			780
Current service cost		9			10			1			—			—			—			10			10
Members’ contributions		1			1			—			—			—			—			1			1
Interest expense		30			30			10			10			1			1			41			41
Benefits paid		(12	)		(13	)		(12	)		(11	)		(1	)		(1	)		(25	)		(25	)
Reclassification(i)		—			—			5			10			—			—			5			10
Actuarial gain arising in the year		(55	)		(31	)		(3	)		—			(1	)		—			(59	)		(31	)
Exchange adjustments		(159	)		15			—			—			—			—			(159	)		15
Benefit obligation at end of year		411			597			185			184			19			20			615			801
Comprising:
Funded plans		377			550			141			139			—			—			518			689
Unfunded plans		34			47			44			45			19			20			97			112
		411			597			185			184			19			20			615			801

(i) Relates to the recognition of the gross assets and obligations of the Netherlands (2007 Hong Kong) pension scheme.

F-28

													Post-
	Pension plans												employment
	UK						US and other						benefits						Total
Movement in plan assets	2008			2007			2008			2007			2008			2007			2008			2007
	($ million)
Fair value of plan assets at beginning of year		611			527			144			111			—			—			755			638
Company contributions		30			54			3			20			1			1			34			75
Members’ contributions		1			1			—			—			—			—			1			1
Benefits paid		(12	)		(13	)		(12	)		(11	)		(1	)		(1	)		(25	)		(25	)
Reclassification(i)		—			—			4			15			—			—			4			15
Expected return on plan assets		32			34			11			9			—			—			43			43
Actuarial loss arising in the year		(57	)		(6	)		(38	)		—			—			—			(95	)		(6	)
Exchange adjustments		(168	)		14			—			—			—			—			(168	)		14
Fair value of plan assets at end of year		437			611			112			144			—			—			549			755

(i) Relates to the recognition of the gross assets and obligations of the Netherlands (2007 Hong Kong) pension scheme.

The most recent actuarial valuation of the InterContinental Hotels UK Pension Plan was carried out as at March 31, 2006 and showed a deficit of £81 million on a funding basis. Under the recovery plan agreed with the trustees, the Group aims to eliminate this deficit by March 2014 through additional Company contributions and projected investment returns. Of the agreed contributions of £40 million, three payments of £10 million have been made and the final commitment of £10 million is being met through the funding of the enhanced pension transfer arrangements detailed below. The next actuarial valuation is due as at March 31, 2009. Company contributions are expected to be $14 million in 2009.

The combined assets of the principal plans and expected rate of return are:

	2008				2007				2006
	Long-term				Long-term				Long-term
	rate of				rate of				rate of
	return				return				return
	expected		Value		expected		Value		expected		Value
	(%)		($ million)		(%)		($ million)		(%)		($ million)
UK pension plans
Liability matching investment funds		3.9		192		—		—		—		—
Equities		7.9		87		7.9		219		7.9		251
Bonds		3.9		140		4.8		360		4.6		241
Other		7.9		18		7.9		32		7.9		35
Total market value of assets				437				611				527
US pension plans
Equities		9.5		37		9.5		77		9.5		67
Fixed income		5.5		55		5.5		52		5.5		43
Total market value of assets				92				129				110

The expected rate of return on assets has been determined following advice from the plans’ independent actuaries and is based on the expected return on each asset class together with consideration of the long-term asset strategy. In conjunction with the Group, the trustees have recently conducted an asset-liability matching study and this has resulted in the adoption of a revised asset allocation strategy for the UK plan. This strategy, which was in the process of implementation at December 31, 2008, aims to have 61% of the plan’s assets invested in liability matching assets and 39% in return seeking assets.

F-29

History of experience gains and losses:

UK pension plans	2008			2007			2006			2005			2004
	($ million)
Fair value of plan assets		437			611			527			431			907
Present value of benefit obligations		(411	)		(597	)		(585	)		(473	)		(1,158	)
Surplus/(deficit) in the plans		26			14			(58	)		(42	)		(251	)
Experience adjustments arising on plan liabilities		55			31			(22	)		(122	)		(109	)
Experience adjustments arising on plan assets		(57	)		(6	)		13			86			26

US and other pension plans	2008			2007			2006			2005			2004
	($ million)
Fair value of plan assets		112			144			111			106			107
Present value of benefit obligations		(185	)		(184	)		(175	)		(176	)		(172	)
Deficit in the plans		(73	)		(40	)		(64	)		(70	)		(65	)
Experience adjustments arising on plan liabilities		3			—			—			(5	)		(11	)
Experience adjustments arising on plan assets		(38	)		—			4			(2	)		2

US post-employment benefits	2008			2007			2006			2005			2004
	($ million)
Present value of benefit obligations		(19	)		(20	)		(19	)		(20	)		(21	)
Experience adjustments arising on plan liabilities		1			—			1			1			(1	)

The cumulative amount of actuarial gains and losses recognized since January 1, 2004 in the Consolidated Statement of Recognized Income and Expense is $150 million (2007 $114 million, 2006 $139 million). The Group is unable to determine how much of the pension scheme deficit recognized on transition to IFRS of $298 million and taken directly to total equity is attributable to actuarial gains and losses since inception of the schemes. Therefore, the Group is unable to determine the amount of actuarial gains and losses that would have been recognized in the Consolidated Statement of Recognized Income and Expense before January 1, 2004.

Post balance sheet event

Subsequent to the year end, approval was given for the payment of enhanced pension transfers to those deferred members of the InterContinental Hotels UK Pension Plan who had accepted an offer to receive the enhancement either as a cash lump sum or as an additional transfer value to an alternative pension provider. The payments, comprising lump sum amounts of £5.8 million and additional contributions of £4.2 million, were made by the Group on January 23, 2009. The transfer values subsequently paid by the plan were £45 million and the corresponding IAS 19 liability extinguished was £38 million. The settlement loss arising, together with the lump sum payment and costs of arrangement, will be charged to the Consolidated Income Statement as an exceptional item, estimated at $22 million, in the first quarter of 2009.

F-30

Policy on remuneration of Executive Directors and senior executives

The following policy has applied throughout the year and, except where stated, will apply in future years, subject to periodic review.

Total level of remuneration

IHG’s overall remuneration is intended to:

•  attract and retain high-quality executives in an environment where compensation levels are based on global market practice;

•  drive aligned focus and reward the achievement of key strategic objectives;

•  support equitable treatment between members of the same executive team; and

•  facilitate global assignments and relocation.

The Company’s strategy is one of achieving competitive outperformance. This is delivered through an ‘asset-light’ operating model, and a focus on core markets. The remuneration strategy seeks to support this by providing upper quartile rewards for achievement of challenging targets, set at levels to deliver competitive advantage. The Remuneration Committee believes that it is important to reward management for targets achieved, provided those targets are stretching, and aligned with shareholders’ interests.

Key developments

2008

Growth in operating profit from continuing operations before exceptional items was 13%.

The Company’s Earnings Before Interest and Tax (“EBIT”) performance resulted in a bonus outcome of 94.3% of the target amount. Rooms growth of 34,757 net additions resulted in an outcome of 99.1% of target on this measure. As a result of this, IHG exceeded the three-year target of adding 50,000 to 60,000 net rooms by the end of 2008.

2009

The strategy of the Company remains unchanged. The Committee believes that the current remuneration framework continues to provide an appropriate link between reward and competitive performance. However, the Committee has made some adjustments in 2009, to ensure that the strategy of competitive outperformance is sustained in the much more challenging market conditions.

Base salaries and fees for Executive and Non-Executive Directors have been frozen at 2008 levels. This decision has been taken in view of the challenging cost environment within which the entire Company will be operating in the coming year.

In the tough trading conditions anticipated in 2009, achieving the Company’s earnings targets will be a key priority. Consequently, the weighting placed on EBIT has been increased in the 2009 Annual Bonus Plan (“ABP”). In addition, all senior executives will have specific cost-savings targets in their key performance objectives.

Performance targets in the Long Term Incentive Plan (“LTIP”) for 2009/11 have been set at stretching levels in the context of the business plan, market expectations, and competitive performance at the time the awards are made. The Committee believes that the current measures of Total Shareholder Return (“TSR”) and Earnings Per Share (“EPS”) will provide a transparent way for shareholders to assess IHG’s competitive performance in the turbulent environment being experienced.

In light of the significant market slowdown expected during this three-year cycle, the EPS growth scale for the 2009/11 LTIP has been reduced. The lower, threshold performance requirement is ahead of current market forecasts of IHG’s EPS growth over the next LTIP cycle, and stretching in the context of market expectations of industry-wide

F-31

RevPAR decline. Despite the stretching nature of this revised range, the Committee has decided that, due to the reduced EPS scale, the maximum award level for the EPS portion of the LTIP will be reduced by half.

Vesting will occur on a straight-line basis within the threshold range of 0-10% per annum growth, with no award at the lower threshold (compared to 20% of salary paid for achievement of threshold previously). Thus, meaningful levels of vesting for this element can only be achieved through EPS performance that is significantly higher than market forecasts. No change has been made to the TSR element of the LTIP scheme.

The Committee believes this 2009 remuneration structure will focus management activity on making further competitive gains, however challenging the market conditions.

Remuneration structure

IHG’s remuneration scheme for senior executives places a strong emphasis on performance-related reward. The individual elements are designed to provide the appropriate balance between fixed remuneration and variable “risk” reward, linked to both the performance of the Group and the achievements of the individual. Group performance-related measures are chosen carefully to ensure a strong link between reward and underlying financial performance, and emphasis is placed on achievement of key strategic priorities.

The normal policy for all Executive Directors is that, using “target” or “expected value” calculations, their performance-related incentives will equate to approximately 70% of total annual remuneration (excluding pensions & benefits).

The main components of remuneration are as follows:

Base salary and benefits  The salary for each Executive Director is reviewed annually and is based on both individual performance and on the relevant competitive market data. Internal relativities and salary levels in the wider employment market are also taken into account. Base salary is the only element of remuneration which is pensionable.

In addition, benefits are provided to Executive Directors in accordance with local market practice.

In assessing levels of pay and benefits, IHG analyzes those offered by different groups of comparator companies. These groups are chosen having regard to participants’:

•  size — turnover, profits and the number of people employed;

•  diversity and complexity of businesses;

•  geographical spread of businesses; and

•  relevance to the hotel industry.

Executive Directors’ salaries for 2009 remain unchanged as shown below:

	2009 Salary		2008 Salary
Andrew Cosslett		£802,000		£802,000
Richard Solomons		£510,000		£510,000

Annual Bonus Plan  Awards under the Annual Bonus Plan (“ABP”) require the achievement of challenging performance goals before target bonus is payable.

The maximum bonus a participant can receive in any one year is 200% of salary. Achievement of target performance results in a bonus of 115% of salary. Half of any bonus earned is deferred in the form of shares for three years. No matching shares are awarded by the Company. The first cash and share awards will be made under these arrangements in 2009, in respect of the 2008 financial year.

For 2008, awards under the ABP were linked to individual performance (30% of total award), EBIT (50% of total award) and net annual rooms additions (20% of total award). Individual performance was measured by the achievement of specific key performance objectives that were linked directly to the Group’s strategic priorities, and an assessment of performance against leadership competencies and behaviours.

F-32

Under the financial measure (EBIT), threshold payout is 90% of target performance, with maximum payout at 110% or more of target. If performance under the financial measure in any year is below threshold, payout on all other measures is reduced by half.

For awards in respect of the 2009 financial year, the ABP will operate as described above, except for an increase in the weighting of the EBIT measure to 70% of the total bonus opportunity. In addition, if EBIT performance is lower than 85% of target, there will be no annual bonus payout on any measures for the 2009 financial year.

Long Term Incentive Plan  The Long Term Incentive Plan (“LTIP”) allows Executive Directors and eligible employees to receive share awards, subject to the achievement of performance conditions, set by the Committee, normally measured over a three-year period. Awards are made annually and, other than in exceptional circumstances, will not exceed three times annual salary for Executive Directors.

The performance conditions for the LTIP are:

•  IHG’s TSR relative to the Dow Jones World Hotels index (“index”); and

•  growth in adjusted EPS over the period.

As indicated to major shareholders last year, the Remuneration Committee will be carrying out a more detailed review during 2009 of IHG’s executive incentive plans, with a particular focus on the performance measures used in the LTIP. If it is concluded that changes are desirable, they will be introduced in 2010 for the 2010/12 LTIP cycle.

For the 2008/10 LTIP cycle, performance will be measured by reference to two components:

TSR (Maximum award of 135% of salary)

•  20% of the TSR award will be released if TSR compound annual growth is equal to the index (threshold performance);

•  100% of the TSR award will be released if TSR compound annual growth exceeds the index by 8% or more.

EPS (Maximum award of 135% of salary)

•  20% of the EPS award will be released if compound annual growth in adjusted EPS is 6% (threshold performance);

•  100% of the EPS award will be released if compound annual growth in adjusted EPS is 16% or more (maximum performance).

For the 2009/11 LTIP cycle, performance will be measured by reference to two components:

TSR (Maximum award of 135% of salary)

•  20% of the TSR award will be released if TSR compound annual growth is equal to the index (threshold performance);

•  100% of the TSR award will be released if TSR compound annual growth exceeds the index by 8% or more.

EPS (Maximum award of 70% of salary)

•  0% of the EPS award will be released if compound annual growth in adjusted EPS is 0% (threshold performance);

•  100% of the EPS award will be released if compound annual growth in adjusted EPS is 10% or more (maximum performance).

For all award cycles, vesting between all stated points will be on a straight-line basis and will continue to be measured in constant currency. Awards under the LTIP lapse if performance conditions are not met — there is no re-testing. In setting the targets, the Committee has taken into account a range of factors, including IHG’s strategic plans, analysts’ expectations for IHG’s performance and for the industry as a whole, the historical performance of the industry and FTSE 100 market practice.

F-33

Executive Share Options  Since 2006, executive share options have not formed part of the Group’s remuneration strategy. Details of prior share option grants are given in the table on page F-39.

Share capital  During 2008, no awards or grants over shares were made that would be dilutive of the Company’s ordinary share capital. Current policy is to settle the majority of awards or grants under any of the Company’s share plans with shares purchased in the market. A number of options granted before 2005 are yet to be exercised and will be settled with the issue of new shares.

Share Ownership  The Committee believes that share ownership by Executive Directors and senior executives strengthens the link between the individual’s personal interest and that of the shareholders.

The Executive Directors are expected to hold all shares earned (net of any share sales required to meet personal tax liabilities) from the Group’s remuneration plans while the value of their holding is less than twice their base salary or three times in the case of the Chief Executive.

Policy on external appointments

The Company recognizes that its Executive Directors may be invited to become Non-Executive Directors of other companies and that such duties can broaden experience and knowledge and benefit the business. Executive Directors are, therefore, allowed to accept one Non-Executive appointment (in addition to any positions where the Director is appointed as the Group’s representative), subject to Board approval, as long as this is not likely to lead to a conflict of interest. Executive Directors are generally authorized to retain the fees received.

Andrew Cosslett was Non-Executive Chairman of Duchy Originals Limited until September 30, 2008, for which he received no remuneration.

Contracts of service

a)   Policy

The Committee’s policy is for Executive Directors to have rolling contracts with a notice period of 12 months. Andrew Cosslett and Richard Solomons have service agreements with a notice period of 12 months. All new appointments are intended to have 12-month notice periods. However, on occasion, to complete an external recruitment successfully, a longer initial notice period reducing to 12 months may be used, in accordance with the Combined Code.

No provisions for compensation for termination following change of control, nor for liquidated damages of any kind, are included in the current Directors’ contracts. In the event of any early termination of an Executive Director’s contract, the policy is to seek to minimize any liability.

Non-Executive Directors have letters of appointment. David Webster’s appointment as Non-Executive Chairman, effective from January 1, 2004, is subject to six months’ notice. The dates of appointment of the other Non-Executive Directors are set out on page 53. All Directors’ appointments and subsequent reappointments are subject to election and re-election by shareholders.

b)  Directors’ contracts

	Contract(1)		Unexpired term/
Director	effective date		notice period
Andrew Cosslett		02.03.05		12 months
Stevan Porter		04.15.03		n/a(2	)
Richard Solomons		04.15.03		12 months

(1)	Each of the Executive Directors signed a letter of appointment, effective from completion of the June 2005 capital reorganization of the Group incorporating the same terms as their original service agreements.
(2)	Stevan Porter passed away on August 7, 2008.

F-34

Policy regarding pensions

Andrew Cosslett, Richard Solomons and other senior UK-based employees participate on the same basis in the executive section of the registered InterContinental Hotels UK Pension Plan and, if appropriate, the InterContinental Executive Top-Up Scheme. The latter is an unfunded arrangement, but with appropriate security provided via a fixed charge on a hotel asset. As an alternative to these unfunded arrangements, a cash allowance may be taken.

Senior US-based executives participate in US retirement benefits plans, as did Stevan Porter until his death on August 7, 2008.

Executives outside the United Kingdom and United States participate in the InterContinental Hotels Group International Savings and Retirement Plan or other local plans.

Policy on remuneration of Non-Executive Directors

Non-Executive Directors are paid a fee which is approved by the Board, having taken account of the fees paid in other companies of a similar complexity. Higher fees are payable to the Senior Independent Director who chairs the Audit Committee and to the Chairman of the Remuneration Committee, reflecting the additional responsibilities of these roles.

Non-Executive Directors’ fee levels were last established by the Board on January 1, 2007 and were scheduled to be reviewed in 2008. However, as indicated on page F-31, IHG has decided to maintain the 2007 and 2008 fee levels for 2009. Therefore, the following annual fee rates remain unchanged:

Role	Fee
Chairman		£390,000
Senior Independent Director & Chairman of Audit Committee		£95,000
Chairman of Remuneration Committee		£80,000
Other Non-Executive Directors		£60,000

F-35

Directors’ emoluments

							Total emoluments excluding
							pensions
	Base salaries		Performance				Jan 1, 2008 to		Jan 1, 2007 to
	and fees		payments(1)		Benefits(2)		Dec 31, 2008		Dec 31, 2007
	(£ thousands)
Executive Directors
Andrew Cosslett		787		495		25		1,307		1,276
Stevan Porter(3)		503		593		5		1,101		677
Richard Solomons(4)		561		401		18		980		771
Non-Executive Directors
David Webster		390		—		2		392		392
David Kappler		95		—		—		95		95
Ralph Kugler(5)		72		—		—		72		60
Jennifer Laing		60		—		—		60		60
Robert C Larson		60		—		—		60		60
Jonathan Linen		60		—		—		60		60
Sir David Prosser(6)		33		—		—		33		80
Ying Yeh(7)		60		—		—		60		5
Former Directors(8)		—		—		1		1		1,124
Total		2,681		1,489		51		4,221		4,660

Stevan Porter, Executive Director and President of the Americas region, relinquished his responsibilities in July 2008, due to illness, and he sadly passed away on August 7, 2008. Richard Solomons, Finance Director, took on the additional role of interim President, The Americas, from July 2008 until the end of the calendar year, prior to the appointment of a permanent successor to this role in January 2009. The consequences of these events for the remuneration of both Stevan Porter and Richard Solomons are set out in the footnotes below.

(1)	Performance payments comprise cash payments in respect of participation in the ABP but exclude bonus payments in deferred shares, details of which are set out in the ABP table on page F-37.
(2)	Benefits incorporate all tax assessable benefits arising from the individual’s employment. For Messrs Cosslett and Solomons, this relates in the main to the provision of a fully expensed company car and private healthcare cover. For Stevan Porter, benefits related in the main to private healthcare cover and financial counselling.
(3)	Amounts reported for Stevan Porter reflect his contractual service during the year and include amounts which were paid to his estate related to accrued vacation, a pension allowance, health cover and a pro-rated payment in respect of participation in the ABP through his contractual service period reflective of financial and individual performance from January 1, to June 30, 2008.
(4)	In respect of his additional duties as interim President of the Americas region, Richard Solomons received a salary supplement of £10,000 per month and participated in a special cash bonus plan. The cash bonus plan was linked to ensuring the successful ongoing performance of the Americas Region for 2008. The target bonus award was 115% of the six-month salary supplement (£60,000), in line with our normal annual bonus plan structure. The maximum bonus was 200% of the salary supplement. This element of his bonus paid at 109% of target and is included in performance payments.
(5)	Ralph Kugler’s fee was increased, pro-rata, from June 1, 2008 when he became Chairman of the Remuneration Committee.
(6)	Sir David Prosser retired as a Director and Chairman of the Remuneration Committee on May 31, 2008.
(7)	Ying Yeh was appointed as a Director on December 1, 2007.
(8)	Richard Hartman retired as a Director on September 25, 2007. His emoluments include salary and benefits for 2007 and ABP payments made in 2008, in respect of the 2007 financial year. Sir Ian Prosser retired as a Director on December 31, 2003. However, he had an ongoing healthcare benefit of £1,150 during the year.

F-36

Long-term reward

Annual Bonus Plan

Messrs Cosslett, Porter and Solomons participated in the ABP during the year ended December 31, 2008. Messrs Cosslett and Solomons are expected to receive an award on February 23, 2009. Matching shares are no longer awarded. Directors’ pre-tax interests during the year were:

																									Value
																									based on
											ABP shares														share
				ABP awards					Market		vested					Market					ABP				price of
				during					price		during					price					awards				562 pence
	ABP awards			the year					per share		the year					per share		Value			held at		Planned		at Dec 31,
	held at			Jan 1, 2008			Award		at award		Jan 1, 2008 to		Vesting			at vesting		at vesting			Dec 31,		vesting		2008
Directors	Jan 1, 2008			to Dec 31, 2008			date		(pence)		Dec 31, 2008		date			(pence)		(£)			2008		date		(£)
Andrew Cosslett		28,877(2	)					3.8.06		853.67p		28,877		3.10.08			780p		225,241			—
		28,878(2	)					3.8.06		853.67p												28,878		3.8.09		162,294
		55,870(3	)					2.26.07		1235p												55,870		2.26.10		313,989
					71,287(4	)		2.25.08		819.67p												71,287		2.25.11		400,633
Total																						156,035				876,916
Stevan Porter		26,978(1	)					3.16.05		653.67p		26,978		3.17.08			735p		198,288	(7)		—
		18,531(2	)					3.8.06		853.67p		18,531		3.10.08			780p		144,542	(7)		—
		18,530(2	)					3.8.06		853.67p		18,530		11.7.08	(6)		542.5p		100,525			—
		29,778(3	)					2.26.07		1235p		29,778		11.7.08	(6)		542.5p		161,546			—
					35,743(5	)		2.25.08		819.67p		35,743		11.7.08	(6)		542.5p		193,906			—
Total																						—
Richard Solomons		29,021(1	)					3.16.05		653.67p		29,021		3.17.08			735p		213,304			—
		18,459(2	)					3.8.06		853.67p		18,459		3.10.08			780p		143,980			—
		18,459(2	)					3.8.06		853.67p												18,459		3.8.09		103,740
		35,757(3	)					2.26.07		1235p												35,757		2.26.10		200,954
					45,634(8	)		2.25.08		819.67p												45,634		2.25.11		256,463
Total																						99,850				561,157
Former Directors
Richard Hartman		29,447(1	)					3.16.05		653.67p		29,447		3.17.08			735p		216,435			—
		17,698(2	)					3.8.06		853.67p		17,698		3.10.08			780p		138,044			—
		17,696(2	)					3.8.06		853.67p		17,696		3.28.08	(9)		772.5p		136,702			—
		51,281(3	)					2.26.07		1235p		51,281		3.28.08	(9)		772.5p		396,146			—
Total																						—

(1)	This award was based on 2004 financial year performance where the performance measures were related to EPS, EBIT and personal performance. Total shares held include matching shares.
(2)	This award was based on 2005 financial year performance where the performance measures were related to EPS, EBIT and personal performance. Total shares held include matching shares.
(3)	This award was based on 2006 financial year performance where the performance measures were related to EPS and EBIT. Total shares held include matching shares.
(4)	This award was based on 2007 financial year performance where the performance measures were related to Group EBIT and net annual rooms additions. The bonus target was 50% of base salary. Andrew Cosslett was awarded 33% for Group EBIT performance and 19.5% for net annual rooms additions. Andrew Cosslett’s total bonus was therefore 52.5% of his base salary. One matching share was awarded for every two bonus shares earned.
(5)	This award was based on financial year 2007 performance where the performance measures were related to Americas’ EBIT and net annual rooms additions. The bonus target was 50% of base salary. Stevan Porter was awarded 25.75% for Americas’ EBIT performance and 19.5% for net annual rooms additions. Stevan Porter’s total bonus was therefore 45.25% of his base salary. One matching share was awarded for every two bonus shares earned. Stevan Porter also received a cash payment of £3,550.52 in lieu of dividends relating to bonus shares.
(6)	In accordance with Plan rules, Stevan Porter’s ABP shares held at January 1, 2008 and awarded during 2008 (in respect of 2007 performance), and which were due to vest from 2009 onwards, vested early at the discretion of the Remuneration Committee, following his

F-37

	death on August 7, 2008. The value of these entitlements was calculated as at November 7, 2008. A cash payment of £1,525.06 in lieu of dividends relating to bonus shares was paid to his estate. The shares will be released to Mr Porter’s estate following completion of UK probate in due course.
(7)	The value of Stevan Porter’s shares at vesting includes £31,130 that was chargeable to UK income tax.
(8)	This award was based on 2007 financial year performance where the performance measures were related to Group EBIT and net annual rooms additions. The bonus target was 50% of base salary. Richard Solomons was awarded 33% for Group EBIT performance and 19.5% for net annual rooms additions. Richard Solomons’ total bonus was therefore 52.5% of his base salary. One matching share was awarded for every two bonus shares earned.
(9)	At the discretion of the Remuneration Committee, all of Richard Hartman’s shares vested six months after his retirement date of September 25, 2007.

Long Term Incentive Plan (“LTIP”)

In 2008, there were three cycles in operation and one cycle which vested.

The awards made in respect of cycles ending on December 31, 2007, 2008, 2009 and 2010 and the maximum pre-tax number of ordinary shares due if performance targets are achieved in full are set out in the table below. In respect of the cycle ending on December 31, 2008, the Company finished in third place in the TSR group and achieved a relative cumulative annual growth rate (“CAGR”) of rooms of 4.9%. Accordingly, 86.7% of the award vested on February 18, 2009.

																						Maximum		Expected
				Maximum							LTIP shares											value		value
				LTIP shares							vested											based on		based on
				awarded							during											share		share
				during					Market		the year		Market							Maximum		price of		price of
	Maximum			the year					price		Jan 1, 2008		price					Actual/		LTIP awards		562 pence		562 pence
	LTIP awards			Jan 1, 2008					per share		to		per share		Value			planned		held at		at Dec 31,		at Dec 31,
	held at			to Dec 31,			Award		at award		Dec 31,		at vesting		at vesting			vesting		Dec 31,		2008		2008
Directors	Jan 1, 2008			2008			date		(pence)		2008		(pence)		(£)			date		2008		(£)		(£)
Andrew Cosslett		276,200	(1)					6.29.05		706p		152,738		827p		1,263,143			2.20.08		—
		200,740	(2)					4.3.06		941.5p		—							2.18.09		200,740		1,128,159		978,114	(5)
		159,506	(3)					4.2.07		1256p		—							2.17.10		159,506		896,424
					253,559	(4)		5.19.08		854p		—							2.16.11		253,559		1,425,001
Total																					613,805		3,449,584
Stevan Porter		174,900	(1)					6.29.05		706p		96,719		827p		799,866	(6)		2.20.08		—
		132,240	(2)					4.3.06		941.5p		125,628		542.5p		681,532	(7)		11.7.08		—
		92,667	(3)					4.2.07		1256p		17,811		542.5p		96,625	(7)		11.7.08		—
					147,209	(4)		5.19.08		854p		28,029		542.5p		152,057	(7)		11.7.08		—
Total																					—
Richard Solomons		176,550	(1)					6.29.05		706p		97,632		827p		807,417			2.20.08		—
		128,470	(2)					4.3.06		941.5p		—							2.18.09		128,470		722,001		625,975	(5)
		102,109	(3)					4.2.07		1256p		—							2.17.10		102,109		573,853
					161,241	(4)		5.19.08		854p		—							2.16.11		161,241		906,174
Total																					391,820		2,202,028
Former Directors
Richard Hartman		196,964	(1)					6.29.05		706p		108,921		827p		900,777			2.20.08		—
		85,230	(2)					4.3.06		941.5p		—							2.18.09		85,230		478,993		415,287	(5)
		28,432	(3)					4.2.07		1256p		—							2.17.10		28,432		159,788
Total																					113,662		638,781

(1) This award was based on performance to December 31, 2007 where the performance measure related to both the Company’s TSR against a group of seven other comparator companies and the CAGR of rooms in the IHG system relative to a group of five other comparator companies. The number of shares released is graded, according to a) where the Company finished in the TSR comparator group, with 50% of the award being released for first or second position and 10% of the award being released for median position; and b) relative CAGR of rooms with 50% of the award being released for 3.4% (upper quartile) CAGR and 10% of the award being released for 2.4% (median) CAGR. The Company finished in fourth place in the TSR group and achieved a relative CAGR of 3.1%. Accordingly, 55.3% of the award vested on February 20, 2008.

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(2)	This award is based on performance to December 31, 2008 where the performance measure relates to both the Company’s TSR against a group of eight other comparator companies and the CAGR of rooms in the IHG system relative to a group of eight other comparator companies. The number of shares released is graded, according to a) where the Company finished in the TSR comparator group, with 50% of the award being released for first or second position and 10% of the award being released for median position; and b) relative CAGR of rooms with 50% of the award being released for 3.9% (upper quartile) CAGR and 10% of the award being released for 3.3% (median) CAGR.
(3)	This award is based on performance to December 31, 2009 where the performance measure relates to both the Company’s TSR against a group of eight other comparator companies and the compound annual growth rate in adjusted EPS over the performance period.
(4)	This award is based on performance to December 31, 2010 where the performance measure relates to both the Company’s TSR relative to the Index and the compound annual growth rate in adjusted EPS over the performance period.
(5)	The Company finished in third place in the TSR group and achieved CAGR of rooms of 4.9%. Accordingly, 86.7% of the award will vest on February 18, 2009.
(6)	The value of Stevan Porter’s shares at vesting included £96,953 that was changeable to UK income tax.
(7)	In accordance with Plan rules, Stevan Porter’s LTIP shares granted in 2006, 2007 and 2008 were pro-rated to reflect his contractual service during the applicable performance periods. The Remuneration Committee calculated the value of these entitlements as at November 7, 2008 at which point they vested. The shares will be transferred to Mr Porter’s estate following completion of UK probate in due course.

Share options

Between 2003 and 2005, grants of options were made under the IHG Executive Share Option Plan. No executive share options have been granted since 2005. In 2003, a grant of options was made under the IHG all-employee Sharesave Plan.

												Weighted
	Ordinary shares under option											average
	Options held		Granted		Lapsed		Exercised		Options			option		Option
	at Jan 1,		during		during		during		held at			price		price
Directors	2008		the year		the year		the year		Dec 31, 2008			(pence)		(pence)
Andrew Cosslett		157,300
										157,300	(1)				619.83
Total		157,300		—		—		—		157,300			619.83
Stevan Porter		321,630
										225,260	(2)				494.17
										96,370	(2)				619.83
Total		321,630		—		—		—		321,630	(2)		531.82
Richard Solomons		334,639
										230,320	(1)				494.17
										100,550	(1)				619.83
										3,769	(3)				420.50
Total		334,639		—		—		—		334,639			531.10

(1)	Options are exercisable at December 31, 2008. Executive share options granted in 2004 are exercisable up to April 2014. Executive share options granted in 2005 are exercisable up to April 2015.
(2)	Following Stevan Porter’s death in August 2008, his outstanding vested executive share options are all exercisable by his personal representatives until August 6, 2009.
(3)	Sharesave options granted in 2003. These are exercisable between March and August 2009.

Option prices range from 420.50 pence to 619.83 pence per IHG share. The closing market value share price on December 31, 2008 was 562.00 pence and the range during the year was 447.50 pence to 865.00 pence per share.

No Director exercised options during the year; therefore there is no disclosable gain by Directors in aggregate for the year ended December 31, 2008 (2007 £nil).

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Directors’ pensions

The following information relates to the pension arrangements provided for Messrs Cosslett and Solomons under the executive section of the InterContinental Hotels UK Pension Plan (“the IC Plan”) and the unfunded InterContinental Executive Top-Up Scheme (“ICETUS”).

The executive section of the IC Plan is a funded, registered, final salary, occupational pension scheme. The main features applicable to the Executive Directors are: a normal pension age of 60; pension accrual of 1/30th of final pensionable salary for each year of pensionable service; life assurance cover of four times pensionable salary; pensions payable in the event of ill health; and spouses’, partners’ and dependants’ pensions on death. When benefits would otherwise exceed a member’s lifetime allowance under the post-April 2006 pensions regime, these benefits are limited in the IC Plan, but the balance is provided instead by ICETUS.

Stevan Porter, until his death on August 7, 2008 had retirement benefits provided via the 401(k) Retirement Plan for employees of Six Continents Hotels Inc. (“401(k)”) and the Six Continents Hotels Inc. Deferred Compensation Plan (“DCP”).

The 401(k) is a tax qualified plan providing benefits on a defined contribution basis, with the member and the relevant company both contributing. The DCP is a non-tax qualified plan, providing benefits on a defined contribution basis, with the member and the relevant company both contributing.

Directors’ pension benefits

									Increase in
									transfer value		Absolute
			Directors’		Transfer value of				over the year,		increase in		Increase		Accrued
			contributions		accrued benefits				less Directors’		accrued		in accrued		pension at
	Age at		in the year(1)		Jan 1, 2008		Dec 31, 2008		contributions		pension(2)		pension(3)		Dec 31, 2008(4)
Directors	Dec 31, 2008		(£)		(£)		(£)		(£)		(£ pa)		(£ pa)		(£ pa)
Andrew Cosslett		53		36,600		1,184,200		2,028,600		807,800		31,700		28,600		102,600
Richard Solomons		47		23,400		2,371,600		3,430,800		1,035,800		28,600		21,300		197,300

(1)	Contributions paid in the year by the Directors under the terms of the plans. Contributions were 5% of full pensionable salary.
(2)	The absolute increase in accrued pension during the year.
(3)	The increase in accrued pension during the year, excluding any increase for inflation.
(4)	Accrued pension is that which would be paid annually on retirement at 60, based on service to December 31, 2008.

The figures shown in the above table relate to the final salary plans only. For defined contribution plans, the contributions made by and in respect of Stevan Porter during 2008 were:

	Director’s contribution to				Company contribution to
	DCP		401(k)		DCP		401(k)
	(£)		(£)		(£)		(£)
Stevan Porter		78,000		6,200		62,700		5,000

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Note 4 — Auditor’s Remuneration paid to Ernst & Young LLP

	Year ended December 31,
	2008		2007		2006
	($ million)
Audit fees		1.7		2.8		3.5
Audit fees in respect of subsidiaries		1.5		2.6		2.6
Tax fees		1.0		0.8		1.2
Interim review fees		0.4		0.4		0.4
Other services pursuant to legislation		0.1		0.2		0.2
Corporate finance fees		—		—		0.2
Other		2.8		2.4		1.5
		7.5		9.2		9.6

Audit fees in respect of the pension scheme were not material.

The Audit Committee has a process to ensure that any non-audit services do not compromise the independence and objectivity of the external auditor and that relevant UK and US professional and regulatory requirements are met. A number of criteria are applied when deciding whether pre-approval for such services should be given. These include the nature of the service, the level of fees and the practicality of appointing an alternative provider, having regard to the skills and experience required to supply the service effectively. Cumulative fees for audit and non-audit services are presented to the Audit Committee on a quarterly basis for review. The Audit Committee is responsible for monitoring adherence to the pre-approval policy.

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Note 5 — Exceptional Items

	Year ended December 31,
	2008			2007			2006
	($ million)
Continuing operations
Exceptional operating items:
Administrative expenses:
Holiday Inn brand relaunch(i)		(35	)		—			—
Office reorganizations(ii)		(5	)		(14	)		—
Severance costs(iii)		(19	)		—			—
		(59	)		(14	)		—
Other operating income and expenses:
Gain on sale of associate investments		13			22			—
Gain on sale of other financial assets		14			36			—
Gain on sale of investment in FelCor Lodging Trust, Inc.		—			—			44
Loss on disposal of hotels (Note 11)*		(2	)		—			—
Office reorganizations(ii)		—			12
		25			70			44
Depreciation and amortization:
Office reorganizations(ii)		(2	)		(2	)		—
Impairment:
Property, plant and equipment (Note 10)		(12	)		6			—
Goodwill (Note 12)		(63	)		—			—
Intangible assets (Note 13)		(21	)		—			—
Investment in associates (Note 14)		—			—			4
		(96	)		6			4
		(132	)		60			48
Tax:
Tax on exceptional operating items		17			—			(11	)
Exceptional tax credit(iv)		25			60			184
		42			60			173
Discontinued operations
Gain on disposal of assets (Note 11);
Gain on disposal of hotels**		—			40			237
Tax charge		5			(8	)		(11	)
		5			32			226
		(85	)		152			447

*	Relates to hotels classified as continuing operations.
**	Relates to hotels classified as discontinued operations.

The above items are treated as exceptional by reason of their size or nature.

(i)	Relates to costs incurred in support of the worldwide relaunch of the Holiday Inn brand family that was announced on October 24, 2007.
(ii)	Relates to costs incurred on the relocation of the Group’s head office and the closure of its Aylesbury facility.

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(iii)  Severance costs relate to redundancies arising from a review of the Group’s cost base in light of the current economic climate.

(iv)  Relates to the release of provisions which are exceptional by reason of their size or nature relating to tax matters which have been settled or in respect of which the relevant statutory limitation period has expired, together with, in 2006, a credit in respect of previously unrecognized losses.

Note 6 — Finance costs

	Year ended December 31,
	2008		2007		2006
	($ million)
Financial income
Interest income		11		15		39
Fair value gains		1		3		9
		12		18		48
Financial expenses
Interest expense		95		90		61
Finance charge payable under finance leases		18		18		7
		113		108		68

Interest income and expenses relate to financial assets and liabilities held at amortized cost, calculated using the effective interest rate method.

Included within interest expense is $12 million (2007 $21 million, 2006 $18 million) payable to the Group’s loyalty program relating to interest on the accumulated balance of cash received in advance of the redemption of points awarded.

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Note 7 — Tax

	Year ended December 31,
	2008			2007			2006
	($ million)
Income tax
UK corporation tax at 28.5% (2007 30.0%, 2006 30.0%):
Current period		13			45			29
Benefit of tax reliefs on which no deferred tax previously recognized		—			(1	)		(18	)
Adjustments in respect of prior periods		(28	)		(33	)		(7	)
		(15	)		11			4
Foreign tax(i):
Current period		130			200			132
Benefit of tax reliefs on which no deferred tax previously recognized		(6	)		(15	)		(2	)
Adjustments in respect of prior periods		(63	)		(100	)		(173	)
		61			85			(43	)
Total current tax		46			96			(39	)
Deferred tax:
Origination and reversal of temporary differences		26			(67	)		49
Changes in tax rates		(1	)		(4	)		(7	)
Adjustments to estimated recoverable deferred tax assets		(4	)		5			(24	)
Adjustments in respect of prior periods		(13	)		8			(44	)
Total deferred tax		8			(58	)		(26	)
Total income tax charge/(credit) on profit for the year		54			38			(65	)
Further analyzed as tax relating to:
Profit before exceptional items		101			90			97
Exceptional items (Note 5):
Exceptional operating items		(17	)		—			11
Exceptional tax credit(ii)		(25	)		(60	)		(184	)
Gain on disposal of assets		(5	)		8			11
		54			38			(65	)
The total tax charge/(credit) can be further analyzed as relating to:
Profit on continuing operations		54			24			(97	)
Profit on discontinued operations		5			6			21
Gain on disposal of assets		(5	)		8			11
		54			38			(65	)

(i)	Represents corporate income taxes on profit taxable in foreign jurisdictions, a significant proportion of which relates to the Group’s US subsidiaries.
(ii)	Represents the release of provisions which are exceptional by reason of their size or nature relating to tax matters which have been settled or in respect of which the relevant statutory limitation period has expired, together with, in 2006, a credit in respect of previously unrecognized losses.

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Reconciliation of tax charge/(credit) on total profit, including gain on disposal of assets

	Year ended December 31,
	2008			2007			2006
	(%)
UK corporation tax at standard rate		28.5			30.0			30.0
Non-deductible expenditure and non-taxable income		8.7			5.6			3.7
Net effect of different rates of tax in overseas businesses		10.1			1.8			3.5
Effect of changes in tax rates		(0.2	)		(1.0	)		(1.0	)
Benefit of tax reliefs on which no deferred tax previously recognized		(1.7	)		(3.3	)		(3.0	)
Effect of adjustments to estimated recoverable deferred tax assets		(1.1	)		1.3			(0.2	)
Adjustment to tax charge in respect of prior periods		(23.5	)		(11.0	)		(6.9	)
Other		(0.8	)		0.4			0.4
Exceptional items and gain on disposal of assets		(2.9	)		(16.3	)		(36.1	)
		17.1			7.5			(9.6	)

Tax paid

Total net tax paid during the year of $2 million (2007 $138 million, 2006 $90 million) comprises $1 million received (2007 $74 million paid, 2006 $79 million paid) in respect of operating activities and $3 million paid (2007 $64 million, 2006 $11 million) in respect of investing activities.

Tax paid is lower than the current period income tax charge primarily due to the receipt of refunds in respect of prior years together with provisions for tax for which no payment of tax has currently been made.

Tax risks, policies and governance

It is the Group’s objective to comply fully with its worldwide corporate income tax filing, payment and reporting obligations, whilst managing its tax affairs within acceptable risk parameters in order to minimize its worldwide liabilities in the best interests of its shareholders. The Group adopts a policy of open co-operation with tax authorities, with full disclosure of relevant issues.

The Group’s tax objectives and policies, and any changes thereto, are reviewed and approved by the Audit Committee. Regular tax reports are made to the Group Finance Director in addition to an annual presentation to the Audit Committee covering the Group’s tax position, strategy and major risks. Tax is also encompassed within the Group’s formal risk management procedures and any material tax disputes, litigation or tax planning activities are subject to internal risk review and management approval procedures.

Note 8 — Dividends paid and proposed

	Year ended December 31,
	2008		2007		2006		2008		2007		2006
			(cents per share)						($ million)
Paid during the year:
Final (declared in previous year)		29.2		25.9		18.7		86		92		84
Interim		12.2		11.5		9.6		32		35		33
Special interim		—		400.0		217.0		—		1,397		914
		41.4		437.4		245.3		118		1,524		1,031
Proposed (not recognized as a liability at December 31):
Final		29.2		29.2		25.9		83		86		92

The final dividend of 20.2 pence (29.2 cents at the closing exchange rate on February 13, 2009) is proposed for approval at the Annual General Meeting on May 29, 2009 and is payable on the shares in issue at March 27, 2009.

F-45

Note 9 — Earnings per ordinary share

Basic earnings per ordinary share is calculated by dividing the profit for the year available for IHG equity holders by the weighted average number of ordinary shares, excluding investment in own shares, in issue during the year.

Diluted earnings per ordinary share is calculated by adjusting basic earnings per ordinary share to reflect the notional exercise of the weighted average number of dilutive ordinary share options outstanding during the year.

Adjusted earnings per ordinary share is disclosed in order to show performance undistorted by exceptional items, to give a more meaningful comparison of the Group’s performance.

	Year ended December 31,
	2008				2007				2006
	Continuing				Continuing				Continuing
	operations		Total		operations		Total		operations		Total
Basic earnings per ordinary share
Profit available for equity holders ($ million)		248		262		420		463		492		754
Basic weighted average number of ordinary shares (millions)		287		287		320		320		389		389
Basic earnings per ordinary share (cents)		86.4		91.3		131.3		144.7		126.5		193.8
Diluted earnings per ordinary share
Profit available for equity holders ($ million)		248		262		420		463		492		754
Diluted weighted average number of ordinary shares (millions)		296		296		329		329		399		399
Diluted earnings per ordinary share (cents)		83.8		88.5		127.7		140.7		123.3		189.0

	2008		2007		2006
	(millions)
Diluted weighted average of ordinary shares is calculated as:
Basic weighted average number of ordinary shares		287		320		389
Dilutive potential ordinary shares — employee share options		9		9		10
		296		329		399

	Year ended December 31,
	2008						2007						2006
	Continuing						Continuing						Continuing
	operations			Total			operations			Total			operations			Total
Adjusted earnings per ordinary share
Profit available for equity holders ($ million)		248			262			420			463			492			754
Adjusting items (Note 5):
Exceptional operating items ($ million)		132			132			(60	)		(60	)		(48	)		(48	)
Tax on exceptional operating items ($ million)		(17	)		(17	)		—			—			11			11
Exceptional tax credit ($ million)		(25	)		(25	)		(60	)		(60	)		(184	)		(184	)
Gain on disposal of assets, net of tax ($ million)		—			(5	)		—			(32	)		—			(226	)
Adjusted earnings ($ million)		338			347			300			311			271			307
Basic weighted average number of ordinary shares (millions)		287			287			320			320			389			389
Adjusted earnings per ordinary share (cents)		117.8			120.9			93.8			97.2			69.7			78.9
Adjusted earnings ($ million)		338			347			300			311			271			307
Diluted weighted average number of ordinary shares (millions)		296			296			329			329			399			399
Adjusted diluted earnings per ordinary share (cents)		114.2			117.2			91.2			94.5			67.9			76.9

F-46

Note 10 — Property, Plant and Equipment

	Land			Fixtures,
	and			fittings and
	buildings			equipment			Total
	($ million)
Year ended December 31, 2007
Cost:
At January 1, 2007		1,610			993			2,603
Additions		10			98			108
Reclassifications		31			(41	)		(10	)
Net transfers to non-current assets classified as held for sale		(77	)		(88	)		(165	)
Disposals		(14	)		(38	)		(52	)
Exchange and other adjustments		46			31			77
At December 31, 2007		1,606			955			2,561
Depreciation:
At January 1, 2007		(160	)		(487	)		(647	)
Provided		(12	)		(66	)		(78	)
Net transfers to non-current assets classified as held for sale		33			31			64
Reversal of impairment		—			6			6
On disposals		14			36			50
Exchange and other adjustments		(4	)		(18	)		(22	)
At December 31, 2007		(129	)		(498	)		(627	)
Net book value at December 31, 2007		1,477			457			1,934
Year ended December 31, 2008
Cost:
At January 1, 2008		1,606			955			2,561
Additions		6			85			91
Net transfers to non-current assets classified as held for sale		(119	)		(60	)		(179	)
Disposals		(15	)		(24	)		(39	)
Exchange and other adjustments		(112	)		(56	)		(168	)
At December 31, 2008.		1,366			900			2,266
Depreciation:
At January 1, 2008		(129	)		(498	)		(627	)
Provided		(11	)		(61	)		(72	)
Net transfers to non-current assets classified as held for sale		37			37			74
Impairment charge		(12	)		—			(12	)
On disposals		15			25			40
Exchange and other adjustments		—			15			15
At December 31, 2008		(100	)		(482	)		(582	)
Net book value at December 31, 2008		1,266			418			1,684
Net book value at January 1, 2007		1,450			506			1,956

The 2008 impairment charge relates to a North American hotel and arises from year-end value in use calculations, taking into account the current economic climate. Estimated future cash flows have been discounted at 13.5%. The charge has been included within impairment on the Consolidated Income Statement and relates to the Americas business segment.

F-47

At December 31, 2007 a previously recorded impairment charge of $6 million was reversed relating to a hotel in the Asia Pacific business segment. No impairment charge, or subsequent reversal, was required at December 31, 2006.

The carrying value of land and buildings held under finance leases at December 31, 2008 was $192 million (2007 $208 million).

The carrying value of assets in the course of construction was $41 million (2007 $nil).

Note 11 — Assets sold, held for sale and discontinued operations

Hotels

During the year ended December 31, 2008, the Group sold one hotel (2007 three hotels, 2006 32 hotels) and two associates (2007 two associates, 2006 nil), continuing the asset disposal program commenced in 2003. Three hotels and two associates were classified as held for sale during the year. At December 31, 2008, five hotels (2007 three hotels, 2006 four hotels and two associates) were classified as held for sale.

At December 31, 2006, an impairment loss of $5 million was recognized on the remeasurement of a property that was classified as held for sale. The loss, which reduced the carrying amount of the asset to fair value less costs to sell, was recognized in the Consolidated Income Statement in gain on disposal of assets. Fair value was determined by an independent property valuation.

	Year ended December 31,
	2008			2007			2006
	($ million)
Net assets of hotels sold
Property, plant and equipment		28			70			1,191
Net working capital		—			2			(40	)
Cash and cash equivalents		8			—			57
Loans and other borrowings		—			—			(18	)
Deferred tax		—			—			(215	)
Minority equity interest		—			(12	)		(24	)
Group’s share of net assets disposed of		36			60			951
Consideration
Current year disposals:
Cash consideration, net of costs paid		34			94			1,155
Deferred consideration		—			—			18
Management contract value		—			6			55
Other		—			—			(26	)
		34			100			1,202
Net assets disposed of		(36	)		(60	)		(951	)
Provision against deferred consideration		—			—			(18	)
Other, including impairment of held for sale asset		—			—			4
Tax		5			(8	)		(11	)
Gain on disposal of assets, net of tax		3			32			226
Analyzed as:
Continuing operations		(2	)		—			—
Discontinued operations		5			32			226
		3			32			226
Net cash inflow
Current year disposals:
Cash consideration, net of costs paid		34			94			1,155
Cash disposed of		(8	)		—			(57	)
Prior year disposals		(1	)		3			42
		25			97			1,140
Assets and liabilities held for sale
Non-current assets classified as held for sale:
Property, plant and equipment		210			115			78
Associates		—			—			20
		210			115			98
Liabilities classified as held for sale:
Deferred tax		(4	)		(6	)		(4	)

F-48

	Year ended
	December 31,
	2008			2007			2006
	($ million)
Results of discontinued operations
Revenue		43			79			319
Cost of sales		(29	)		(59	)		(246	)
		14			20			73
Depreciation and amortization		—			(3	)		(16	)
Operating profit		14			17			57
Tax		(5	)		(6	)		(21	)
Profit after tax		9			11			36
Gain on disposal of assets, net of tax (Note 5)		5			32			226
Profit for the year from discontinued operations		14			43			262

	2008		2007		2006
	cents		cents		cents
	per ordinary		per ordinary		per ordinary
	share		share		share
Earnings per ordinary share from discontinued operations
Basic		4.9		13.4		67.3
Diluted		4.7		13.0		65.7

	Year ended December 31,
	2008		2007			2006
	($ million)
Cash flows attributable to discontinued operations
Operating profit before interest, depreciation and amortization		14		20			73
Investing activities		—		(2	)		(17	)
Financing activities		—		—			(45	)

The effect of discontinued operations on segmental results is shown in Note 2.

Note 12 — Goodwill

	At December 31,
	2008			2007
	($ million)
At January 1		221			214
Impairment charge		(63	)		—
Exchange and other adjustments		(15	)		7
At December 31		143			221

Goodwill arising on business combinations that occurred before January 1, 2005 was not restated on adoption of IFRS as permitted by IFRS 1.

F-49

Goodwill has been allocated to cash-generating units (“CGUs”) for impairment testing as follows:

	At			At
	December 31,			December 31,
	2008			2007
	($ million)
Americas managed operations		78	*		141
Asia Pacific managed and franchised operations		65			80
		143			221

* $141 million before impairment charge.

The Group tests goodwill for impairment annually, or more frequently if there are any indications that an impairment may have arisen. The recoverable amounts of the CGUs are determined from value in use calculations. These calculations use pre-tax cash flow forecasts derived from the most recent financial budgets approved by management for the next year and extrapolate cash flows for the following four years using growth rates based on management expectations and industry growth forecasts. After this period, the terminal value of the future cash flows is calculated based on perpetual growth rates that do not exceed the average long-term growth rates for the relevant markets. The cash flows are discounted using management estimates of the pre-tax rates that reflect current market assessments of the time value of money and the risks specific to the CGUs.

The key assumptions used for the value in use calculations are as follows:

	Years 2 to 5 growth rates				Perpetual growth rates				Discount rates
	2008		2007		2008		2007		2008		2007
	%		%		%		%		%		%
Americas managed operations		1.0 - 4.0		4.0		2.7		2.7		12.5		10.0
Asia Pacific managed and franchised operations		2.5 - 10.0		15.0		4.0		4.0		16.0		11.0

The impairment charge arises in respect of the Americas managed operations CGU reflecting revised fee expectations in light of the current economic climate. The charge has been included within impairment on the Consolidated Income Statement and relates to the Americas business segment.

At December 31, 2008, the recoverable amount of the Americas managed operations CGU equaled its carrying value and consequently any adverse charge in key assumptions would cause the carrying value of the CGU to exceed its recoverable amount. In respect of the Asia Pacific managed and franchised operations CGU, management believe that the carrying value of the CGU would only exceed its recoverable amount in the event of highly unlikely changes in the key assumptions.

F-50

Note 13 — Intangible assets

				Management			Other
	Software			contracts			intangibles			Total
	($ million)
Year ended December 31, 2007
Cost:
At January 1, 2007		85			229			71			385
Additions		26			10			14			50
Reclassification		10			—			—			10
Disposals		(1	)		—			(1	)		(2	)
Exchange and other adjustments		—			10			2			12
At December 31, 2007		120			249			86			455
Amortization:
At January 1, 2007		(45	)		(14	)		(24	)		(83	)
Provided		(19	)		(12	)		(7	)		(38	)
Disposals		1			—			1			2
Exchange and other adjustments		—			—			(1	)		(1	)
At December 31, 2007		(63	)		(26	)		(31	)		(120	)
Net book value at December 31, 2007		57			223			55			335
Year ended December 31, 2008
Cost:
At January 1, 2008		120			249			86			455
Additions		40			—			9			49
Disposals		(2	)		—			—			(2	)
Exchange and other adjustments		—			(29	)		(2	)		(31	)
At December 31, 2008		158			220			93			471
Amortization:
At January 1, 2008		(63	)		(26	)		(31	)		(120	)
Provided		(20	)		(12	)		(8	)		(40	)
Impairment charge		—			(21	)		—			(21	)
Disposals		2			—			—			2
Exchange and other adjustments		—			9			1			10
At December 31, 2008		(81	)		(50	)		(38	)		(169	)
Net book value at December 31, 2008		77			170			55			302
Net book value at January 1, 2007		40			215			47			302

The weighted average remaining amortization period for management contracts is 23 years (2007 24 years).

The impairment charge relates to the value of management contracts capitalized as a result of related asset disposals in prior years and arises from a revision to expected fee income. Estimated future cash flows have been discounted at 12.5% (previous valuation: 10.0%). The charge has been included within impairment on the Consolidated Income Statement and relates to the EMEA business segment.

F-51

Note 14 — Investment in associates

The Group holds five investments (2007 seven) accounted for as associates. The following table summarizes the financial information of the associates:

	At			At
	December 31,			December 31,
	2008			2007
	($ million)
Share of associates’ balance sheet
Current assets		5			6
Non-current assets		65			104
Current liabilities		(20	)		(16	)
Non-current liabilities		(7	)		(29	)
Net assets		43			65
Share of associates’ revenue and profit
Revenue		30			32
Net profit		—			2
Related party transactions
Revenue from related parties		5			6
Amounts owed by related parties		2			2

At December 31, 2006, a previously recorded impairment charge of $4 million was reversed relating to an associate in the EMEA business segment. No impairment charge, or subsequent reversal, was required at either December 31, 2007 or December 31, 2008.

Note 15 — Other Financial Assets

	At		At
	December 31,		December 31,
	2008		2007
	($ million)
Non-current
Equity securities available-for-sale		64		93
Other		88		95
		152		188
Current
Equity securities available-for-sale		6		—
Other		4		18
		10		18

Available-for-sale financial assets, which are held on the balance sheet at fair value, consist of equity investments in listed and unlisted shares. Of the total amount of equity investments at December 31, 2008, $2 million (2007 $3 million) were listed securities and $68 million (2007 $90 million) unlisted; $44 million (2007 $56 million) were denominated in US dollars, $13 million (2007 $16 million) in Hong Kong dollars and $13 million (2007 $21 million) in other currencies. Unlisted equity shares are mainly investments in entities that own hotels which the Group manages. The fair value of unlisted equity shares has been estimated using valuation guidelines issued by the British Venture Capital Association and is based on assumptions regarding expected future earnings. Listed equity share valuation is based on observable market prices. Dividend income from available-for-sale equity securities of $11 million (2007 $16 million, 2006 $7 million) is reported as other operating income and expenses in the Consolidated Income Statement.

F-52

Other financial assets consist of trade deposits, restricted cash and deferred consideration on asset disposals. These amounts have been designated as “loans and receivables” and are held at amortized cost. Restricted cash of $55 million (2007 $54 million) relates to cash held in bank accounts which is pledged as collateral to insurance companies for risks retained by the Group.

The movement in the provision for impairment of other financial assets during the year is as follows:

	At			At
	December 31,			December 31,
	2008			2007
	($ million)
At January 1		(9	)		(41	)
Provided		(2	)		—
Recoveries		—			3
Disposals		—			5
Amounts written off against the financial asset		—			24
At December 31		(11	)		(9	)

The provision is used to record impairment losses unless the Group is satisfied that no recovery of the amount is possible; at that point the amount considered irrecoverable is written off against the financial asset directly with no impact on the Consolidated Income Statement.

Note 16 — Inventories

	At		At
	December 31,		December 31,
	2008		2007
	($ million)
Finished goods		2		3
Consumable stores		2		3
		4		6

Note 17 — Trade and other receivables

	At		At
	December 31,		December 31,
	2008		2007
	($ million)
Trade receivables		318		362
Other receivables		49		59
Prepayments		45		51
		412		472

Trade and other receivables are designated as “loans and receivables” and are held at amortized cost.

Trade receivables are non-interest-bearing and are generally on payment terms of up to 30 days. The fair value of trade and other receivables approximates their carrying value.

F-53

The maximum exposure to credit risk for trade and other receivables, excluding prepayments, at the balance sheet date by geographic region is:

	At		At
	December 31,		December 31,
	2008		2007
	($ million)
Americas		208		231
Europe, the Middle East and Africa		109		141
Asia Pacific		50		49
		367		421

The aging of trade and other receivables, excluding prepayments, at the balance sheet date is:

	At December 31, 2008							At December 31, 2007
	Gross		Provision			Net		Gross		Provision			Net
	($ million)
Not past due		254		(13	)		241		286		(2	)		284
Past due 1 to 30 days		61		(1	)		60		74		(3	)		71
Past due 31 to 180 days		63		(5	)		58		77		(15	)		62
Past due more than 180 days		99		(91	)		8		80		(76	)		4
		477		(110	)		367		517		(96	)		421

The movement in the provision for impairment of trade and other receivables during the year is as follows:

	At			At
	December 31,			December 31,
	2008			2007
	($ million)
At January 1		(96	)		(85	)
Provided		(28	)		(23	)
Amounts written off		14			12
At December 31		(110	)		(96	)

Note 18 — Cash and cash equivalents

	At		At
	December 31,		December 31,
	2008		2007
	($ million)
Cash at bank and in hand		32		53
Short-term deposits		50		52
		82		105

Short-term deposits are highly liquid investments with an original maturity of three months or less, in various currencies.

F-54

Note 19 — Trade and other payables

	At		At
	December 31,		December 31,
	2008		2007
	($ million)
Current
Trade payables		111		100
Other tax and social security payable		31		39
Other payables		322		345
Accruals		272		297
Derivatives		10		3
		746		784
Non-current
Other payables		392		279

Trade payable are non-interest-bearing and are normally settled within 45 days.

Other payables includes $471 million (2007 $426 million) relating to the future redemption liability of the Group’s loyalty program, of which $96 million (2007 $169 million) is classified as current and $375 million (2007 $257 million) as non-current.

Derivatives are held on the balance sheet at fair value. Fair value is estimated using discounted future cash flows taking into consideration interest and exchange rates prevailing at the balance sheet date.

Note 20 — Loans and other borrowings

	At December 31, 2008						At December 31, 2007
	Current		Non-current		Total		Current		Non-current		Total
	($ million)
Secured bank loans		5		2		7		—		7		7
Finance leases		16		186		202		16		184		200
Unsecured bank loans		—		1,146		1,146		—		1,557		1,557
Total borrowings		21		1,334		1,355		16		1,748		1,764
Denominated in the following currencies:
Sterling		—		152		152		—		553		553
US dollars		16		873		889		16		854		870
Euro		—		224		224		—		243		243
Other		5		85		90		—		98		98
		21		1,334		1,355		16		1,748		1,764

Secured bank loans

These mortgages are secured on the hotel properties to which they relate. The rates of interest and currencies of these loans vary.

F-55

Finance leases

Finance lease obligations, which relate to the 99 year lease on the InterContinental Boston, are payable as follows:

	At December 31, 2008					At December 31, 2007
	Minimum			Present		Minimum			Present
	lease			value of		lease			value of
	payments			payments		payments			payments
	($ million)
Less than one year		16			16		16			16
Between one and five years		64			48		64			47
More than five years		3,380			138		3,396			137
		3,460			202		3,476			200
Less: amount representing finance charges		(3,258	)		—		(3,276	)		—
		202			202		200			200

The Group has the option to extend the term of the lease for two additional 20 year terms. Payments under the lease step up at regular intervals over the lease term.

Unsecured bank loans

Unsecured bank loans are borrowings under the Group’s Syndicated Facility and its short-term bilateral loan facilities. Amounts are classified as non-current when the facilities have more than 12 months to expiry. These facilities contain financial covenants and, as at the balance sheet date, the Group was not in breach of these covenants, nor had any breaches or defaults occurred during the year. In the second quarter of 2008, the Group successfully refinanced $2.1 billion of long-term debt facilities. This new syndicated bank facility consists of two tranches; a $1.6 billion five-year revolving credit facility and a $0.5 billion term loan with a 30-month maturity. Unsecured bank loans are shown net of the facility fee capitalized during the year.

Facilities provided by banks

	At December 31, 2008						At December 31, 2007
	Utilized		Unutilized		Total		Utilized		Unutilized		Total
	($ million)
Committed		1,161		946		2,107		1,564		757		2,321
Uncommitted		—		25		25		—		50		50
		1,161		971		2,132		1,564		807		2,371

	At December 31,
	2008		2007
	($ million)
Unutilized facilities expire:
within one year		25		150
after one but before two years		—		657
after two but before five years		946		—
		971		807

F-56

Note 21 — Financial risk management policies

Overview

The Group’s treasury policy is to manage financial risks that arise in relation to underlying business needs. The activities of the treasury function are carried out in accordance with Board approved policies and are subject to regular audit. The treasury function does not operate as a profit center.

The treasury function seeks to reduce the financial risk of the Group and manages liquidity to meet all foreseeable cash needs. Treasury activities include money market investments, spot and forward foreign exchange instruments, currency options, currency swaps, interest rate swaps and options and forward rate agreements. One of the primary objectives of the Group’s treasury risk management policy is to mitigate the adverse impact of movements in interest rates and foreign exchange rates.

Market risk exposure

The US dollar is the predominant currency of the Group’s revenue and cash flows. Movements in foreign exchange rates can affect the Group’s reported profit, net assets and interest cover. To hedge translation exposure, wherever possible, the Group matches the currency of its debt (either directly or via derivatives) to the currency of its net assets, whilst maximizing the amount of US dollars borrowed to reflect the predominant trading currency.

Foreign exchange transaction exposure is managed by the forward purchase or sale of foreign currencies or the use of currency options. Most significant exposures of the Group are in currencies that are freely convertible.

Interest rate exposure is managed within parameters that stipulate that fixed rate borrowings should normally account for no less than 25% and no more than 75% of net borrowings for each major currency. This is achieved through the use of interest rate swaps and options and forward rate agreements.

Based on the year end net debt position and given the underlying maturity profile of investments, borrowings and hedging instruments at that date, a one percentage point rise in US dollar interest rates would increase the annual net interest charge by approximately $4.7 million (2007 $5.8 million, 2006 $2.9 million). A similar rise in euro and sterling interest rates would increase the annual net interest charge by approximately $1.2 million (2007 $1.2 million, 2006 $0.9 million) and $0.9 million (2007 $3.2 million, 2006 $2.0 million) respectively.

A general strengthening of the US dollar (specifically a five cent fall in the sterling : US dollar rate) would increase the Group’s profit before tax by an estimated $4.0 million (2007 $2.9 million, 2006 $2.6 million) and decrease net assets by an estimated $1.1 million (2007 increase of $6.1 million, 2006 decrease of $19.3 million). Similarly, a five cent fall in the euro: US dollar rate would reduce the Group’s profit before tax by an estimated $2.0 million (2007 $1.6 million, 2006 $2.1 million) and decrease net assets by an estimated $4.3 million (2007 $5.9 million, 2006 $9.1 million).

Liquidity risk exposure

The treasury function ensures that the Group has access to sufficient funds to allow the implementation of the strategy set by the Board. At the year end, the Group had access to $946 million of undrawn committed facilities. Medium and long-term borrowing requirements are met through the $2.1 billion Syndicated Facility of which $0.5 billion expires in November 2010 and $1.6 billion expires in May 2013. Short-term borrowing requirements are met from drawings under bilateral bank facilities.

The Syndicated Facility contains two financial covenants; interest cover and net debt divided by earnings before interest, tax, depreciation and amortization (“EBITDA”). Net debt is calculated as total borrowings less cash and cash equivalents. The Group is in compliance with all of the financial covenants in its loan documents, none of which is expected to present a material restriction on funding in the near future.

At the year end, the Group had surplus cash of $82 million which is held in short-term deposits and cash funds which allow daily withdrawals of cash. Most of the Group’s surplus funds are held in the United Kingdom or United States and there are no material funds where repatriation is restricted as a result of foreign exchange regulations.

F-57

Credit risk exposure

Credit risk on treasury transactions is minimized by operating a policy on the investment of surplus cash that generally restricts counterparties to those with an A credit rating or better or those providing adequate security.

Notwithstanding that counterparties must have an A credit rating or better, during periods of significant financial market turmoil, counterparty exposure limits are significantly reduced and counterparty credit exposure reviews are broadened to include the relative placing of credit default swap pricings.

The Group trades only with recognized, creditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures.

In respect of credit risk arising from financial assets, the Group’s exposure to credit risk arises from default of the counterparty, with a maximum exposure equal to the carrying amount of these instruments.

Capital risk management

The Group manages its capital to ensure that it will be able to continue as a going concern. The capital structure consists of net debt, issued share capital and reserves. The structure is managed to minimize the Group’s cost of capital, to provide ongoing returns to shareholders and to service debt obligations, whilst maintaining maximum operational flexibility. Surplus cash is either reinvested in the business, used to repay debt or returned to shareholders. The Group maintains a conservative level of debt. The level of debt is monitored on the basis of a cashflow leverage ratio, which is net debt divided by EBITDA.

Hedging

Interest rate risk

The Group hedges its interest rate risk by taking out interest rate swaps to fix the interest flows on between 25% and 75% of its net borrowings in major currencies. At December 31, 2008, the Group held interest rate swaps (swapping floating for fixed) with notional principals of US $250 million, £75 million and €75 million (2007 US $100 million, £150 million and €75 million). The Group also held forward-starting interest rate swaps with notional principals of $100 million, £75 million and €75 million (2007 £150 million and €75 million). These swaps will replace current swaps with the same notional principals when they mature in 2009. The interest rate swaps are designated as cash flow hedges of borrowings under the Syndicated Facility and they are held on the balance sheet at fair value in other financial assets and other payables.

Changes in the fair value of cash flow hedges are recognized in the unrealized gains and losses reserve to the extent that the hedges are effective. When the hedged item is recognized, the cumulative gains and losses on the hedging instrument are recycled to the income statement. No ineffectiveness was recognized during the current or prior year.

Foreign currency risk

The Group is exposed to foreign currency risk on income streams denominated in foreign currencies. When appropriate, the Group hedges a portion of forecast foreign currency income by taking out forward exchange contracts. The designated risk is the spot foreign exchange risk. Forward contracts are held at fair value on the balance sheet as other financial assets and other payables.

Hedge of net investment in foreign operations

The Group designates its foreign currency bank borrowings and currency derivatives as net investment hedges of foreign operations. The designated risk is the spot foreign exchange risk; the interest on these financial instruments is taken through financial income or expense and the derivatives are held on the balance sheet at fair value in other financial assets and other payables.

Hedge effectiveness is measured at calendar quarter ends. Variations in fair value due to changes in the underlying exchange rates are taken to the currency translation reserve until an operation is sold, at which point the

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cumulative currency gains and losses are recycled against the gain or loss on sale. No ineffectiveness was recognized on net investment hedges during the current or prior year.

At December 31, 2008, the Group held foreign exchange derivatives with a principal of $nil (2007 $12 million) and a fair value of $nil (2007 $nil). The maximum amount of foreign exchange derivatives held during the year as net investment hedges and measured at calendar quarter ends had a principal of $70 million (2007 $533 million) and a fair value of $(4.2) million (2007 $3.1 million).

Note 22 — Financial Instruments

Liquidity risk

The following are the undiscounted contractual cash flows of financial liabilities, including interest payments:

	Less than		Between 1 and		Between 2 and		More than
December 31, 2008	1 year		2 years		5 years		5 years		Total
	($ million)
Secured bank loans		2		8		—		—		10
Finance lease obligations		16		16		48		3,380		3,460
Unsecured bank loans		1,156		—		—		—		1,156
Trade and other payables		737		101		113		277		1,228
Derivatives		6		4		3		—		13

	Less than		Between 1 and		Between 2 and		More than
December 31, 2007	1 year		2 years		5 years		5 years		Total
	($ million)
Secured bank loans		2		2		8		—		12
Finance lease obligations		16		16		48		3,396		3,476
Unsecured bank loans		1,570		—		—		—		1,570
Trade and other payables		781		127		100		110		1,118
Derivatives		12		—		—		—		12

Cash flows relating to unsecured bank loans are classified according to the maturity date of the loan drawdown rather than the facility maturity date.

Credit risk

The carrying amount of financial assets represents the maximum exposure to credit risk.

	At		At
	December 31,		December 31,
	2008		2007
	($ million)
Equity securities available-for-sale		70		93
Loans and receivables:
Cash and cash equivalents		82		105
Other financial assets		92		113
Trade and other receivables, excluding prepayments		367		421
		611		732

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Interest rate risk

For each class of interest-bearing financial asset and financial liability, the following table indicates the range of interest rates effective at the balance sheet date, the carrying amount on the balance sheet and the periods in which they reprice, if earlier than the maturity date:

						Repricing analysis
			Total						Between		Between		Between
	Effective		carrying			Less than			6 months		2 and 3		3 and 4		More than
As at December 31, 2008	interest rate		amount			6 months			and 1 year		years		years		5 years
	(%)		($ million)
Cash and cash equivalents		0.0-2.8		(82	)		(82	)		—		—		—		—
Secured bank loans		6.1		7			7			—		—		—		—
Finance lease obligations*		9.7		202			—			—		—		—		202
Unsecured bank loans:
Euro floating rate		3.4		224			224			—		—		—		—
— effect of euro interest rate swaps*		1.8		—			(105	)		—		105		—		—
US dollar floating rate		1.5		687			687			—		—		—		—
— effect of US dollar interest rate swaps*		1.0		—			(250	)		100		—		150		—
Sterling floating rate		2.8		152			152			—		—		—		—
— effect of sterling interest rate swaps*		3.9		—			(109	)		109		—		—		—
HK dollar floating rate		2.9		83			83			—		—		—		—
Net debt				1,273			607			209		105		150		202

*  These items bear interest at a fixed rate.

							Repricing analysis
				Total						Between		Between
	Effective			carrying			Less than			6 months		1 and 2		More than
As at December 31, 2007	interest rate			amount			6 months			and 1 year		years		5 years
				($ million)
	(%)
Cash and cash equivalents		0.0-5.9			(105	)		(105	)		—		—		—
Secured bank loans		8.2			7			7			—		—		—
Finance lease obligations*		9.7			200			—			—		—		200
Unsecured bank loans:
Euro floating rate		5.3			243			243			—		—		—
— effect of euro interest rate swaps*		(0.6	)		—			(111	)		—		111		—
US dollar floating rate		5.5			670			670			—		—		—
— effect of US dollar interest rate swaps*		(0.4	)		—			(100	)		100		—		—
Sterling floating rate		6.9			553			553			—		—		—
— effect of sterling interest rate swaps*		0.0			—			(151	)		—		151		—
HK dollar floating rate		4.5			91			91			—		—		—
Net debt					1,659			1,097			100		262		200

*  These items bear interest at a fixed rate.

Interest rate swaps are included in the above tables to the extent that they affect the Group’s interest rate repricing risk. The swaps hedge the floating rate debt by fixing the interest rate. The effect shown above is their impact on the debt’s floating rate, for an amount equal to their notional principal (principal and maturity of swap is

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shown in the repricing analysis). The fair values of derivatives are recorded in other financial assets and other payables.

Trade and other receivables and trade and other payables are not included above as they are not interest-bearing.

Fair values

The table below compares carrying amounts and fair values of the Group’s financial assets and liabilities.

	At December 31, 2008						At December 31, 2007
	Carrying						Carrying
	value			Fair value			value			Fair value
				($ million)
Financial assets
Equity securities available-for-sale (Note 15)		70			70			93			93
Loans and receivables:
Cash and cash equivalents (Note 18)		82			82			105			105
Other financial assets (Note 15)		92			92			113			113
Trade and other receivables, excluding prepayments (Note 17)		367			367			421			421
Financial liabilities
Borrowings, excluding finance lease obligations (Note 20)		(1,153	)		(1,153	)		(1,564	)		(1,564	)
Finance lease obligations (Note 20)		(202	)		(168	)		(200	)		(250	)
Trade and other payables, excluding derivatives (Note 19)		(1,128	)		(1,128	)		(1,060	)		(1,060	)
Derivatives (Note 19)		(10	)		(10	)		(3	)		(3	)

The fair value of cash and cash equivalents approximates book value due to the short maturity of the investments and deposits. Equity securities available-for-sale and derivatives are held on the balance sheet at fair value as set out in Note 15. The fair value of other financial assets approximates book value based on prevailing market rates. The fair value of borrowings, excluding finance lease obligations, approximates book value as interest rates reset to market rates on a frequent basis. The fair value of the finance lease obligation is calculated by discounting future cash flows at prevailing interest rates. The fair value of trade and other receivables and trade and other payables approximates to their carrying value, including the future redemption liability of the Group’s loyalty program.

Note 23 — Net debt

	At December 31,			At December 31,
	2008			2007
	($ million)
Cash and cash equivalents		82			105
Loans and other borrowings — current		(21	)		(16	)
Loans and other borrowings — non-current		(1,334	)		(1,748	)
Net debt		(1,273	)		(1,659	)

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	Year ended			Year ended
	December 31,			December 31,
	2008			2007
	($ million)
Movement in net debt
Net increase/(decrease) in cash and cash equivalents		25			(237	)
Add back cash flows in respect of other components of net debt:
Decrease/(increase) in borrowings		316			(1,108	)
Decrease/(increase) in net debt arising from cash flows		341			(1,345	)
Non-cash movements:
Finance lease liability		(2	)		(18	)
Exchange and other adjustments		47			(33	)
Decrease/(increase) in net debt		386			(1,396	)
Net debt at beginning of the year		(1,659	)		(263	)
Net debt at end of the year		(1,273	)		(1,659	)

Note 24 — Share-based payments

Annual Bonus Plan

The IHG Annual Bonus Plan enables eligible employees, including Executive Directors, to receive all or part of their bonus in the form of shares together with, in certain cases, a matching award of free shares of up to half the deferred amount. The bonus and matching shares in the 2005 plan are deferred and released in three equal tranches on the first, second and third anniversaries of the award date. The bonus and matching shares in the 2006 and 2007 plans are released on the third anniversary of the award date. Under the 2006 and 2007 plans a percentage of the award (Board members — 100% (2006 80%); other eligible employees — 50%) must be taken in shares and deferred. Participants may defer the remaining amount on the same terms or take it immediately in cash, in which case it is not accounted for as a share-based payment. Under the terms of the 2008 plan, a fixed percentage of the bonus is awarded in the form of shares with no voluntary deferral and no matching shares. The awards in all of the plans are conditional on the participants remaining in the employment of a participating company. Participation in the Annual Bonus Plan is at the discretion of the Remuneration Committee. The number of shares is calculated by dividing a specific percentage of the participant’s annual performance related bonus by the middle market quoted prices on the three consecutive dealing days immediately preceding the date of grant. A number of executives participated in the plan during the year and conditional rights over 661,657 (2007 675,515, 2006 606,573) shares were awarded to participants.

Long Term Incentive Plan

The Long Term Incentive Plan allows Executive Directors and eligible employees to receive share awards, subject to the satisfaction of a performance condition, set by the Remuneration Committee, which is normally measured over a three year period. Awards are normally made annually and, except in exceptional circumstances, will not exceed three times salary for Executive Directors and four times salary in the case of other eligible employees. During the year, conditional rights over 5,060,509 (2007 3,538,535, 2006 4,277,550) shares were awarded to employees under the plan. The plan provides for the grant of “nil cost options” to participants as an alternative to conditional share awards.

Executive Share Option Plan

For options granted, the option price is not less than the market value of an ordinary share, or the nominal value if higher. The market value is the quoted price on the business day preceding the date of grant, or the average of the middle market quoted prices on the three consecutive dealing days immediately preceding the date of grant. A performance condition has to be met before options can be exercised. The performance condition is set by the Remuneration Committee. The plan was not operated during 2008 and no options were granted in the year under the plan. The latest date that any options may be exercised is April 4, 2015.

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Sharesave Plan

The Sharesave Plan is a savings plan whereby employees contract to save a fixed amount each month with a savings institution for three or five years. At the end of the savings term, employees are given the option to purchase shares at a price set before savings began. The Sharesave Plan is available to all UK employees (including Executive Directors) employed by participating companies provided that they have been employed for at least one year. The plan provides for the grant of options to subscribe for ordinary shares at the higher of nominal value and not less than 80% of the middle market quotations of the ordinary shares on the three dealing days immediately preceding the invitation date. The plan was not operated during 2008 and no options were granted in the year under the plan. The latest date that any options may be exercised under the three-year plan was February 29, 2008 and under the five-year plan is February 28, 2010.

US Employee Stock Purchase Plan

The US Employee Stock Purchase Plan will allow eligible employees resident in the United States an opportunity to acquire Company American Depositary Shares (“ADS”s) on advantageous terms. The plan, when operational, will comply with Section 423 of the US Internal Revenue Code of 1986. The option to purchase ADSs may be offered only to employees of designated subsidiary companies. The option price may not be less than the lesser of either 85% of the fair market value of an ADS on the date of grant or 85% of the fair market value of an ADS on the date of exercise. Options granted under the plan must generally be exercised within 27 months from the date of grant. The plan was not operated during 2008 and at December 31, 2008 no options had been granted under the plan.

Former Six Continents Share Schemes

Under the terms of the separation of Six Continents PLC in 2003, holders of options under the Six Continents Executive Share Option Schemes were given the opportunity to exchange their Six Continents PLC options for equivalent value new options over IHG shares. As a result of this exchange, 23,195,482 shares were put under option at prices ranging from 308.5 pence to 593.3 pence. The exchanged options were immediately exercisable and are not subject to performance conditions. During 2008, 159,254 (2007 1,358,791, 2006 3,678,239) such options were exercised and 113,024 shares lapsed (2007 nil, 2006 nil), leaving a total of 2,424,605 (2007 2,696,883, 2006 4,055,674) such options outstanding at prices ranging from 308.5 pence to 466.7 pence. The latest date that any options may be exercised is October 3, 2012.

The Group recognized a cost of $47 million (2007 $60 million, 2006 $33 million) in operating profit and $2 million (2007 $nil, 2006 $nil) within exceptional administrative expenses related to equity-settled share-based payment transactions during the year.

The aggregate consideration in respect of ordinary shares issued under option schemes during the year was $2 million (2007 $32 million, 2006 $37 million).

The following table sets forth awards and options granted during 2008. No awards were granted under the Executive Share Option Plan, Sharesave Plan or US Employee Stock Purchase Plan during the year.

	Annual Bonus		Long Term
	Plan		Incentive Plan
Number of shares awarded in 2008		661,657		5,060,509

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In 2008, 2007 and 2006, the Group used separate option pricing models and assumptions for each plan. The following tables set forth information about how the fair value of each option is calculated:

	Annual			Long Term
2008	Bonus Plan			Incentive Plan
Valuation model	Binomial			Monte Carlo
				Simulation and
				Binomial
Weighted average share price (pence)		836.0			865.0
Expected dividend yield		3.33	%		2.76	%
Risk-free interest rate					4.78	%
Volatility(i)					30	%
Term (years)		3.0			3.0

	Annual			Long Term
2007	Bonus Plan			Incentive Plan
Valuation model	Binomial			Monte Carlo
				Simulation and
				Binomial
Weighted average share price (pence)		1,252.0			1,262.0
Expected dividend yield		2.13	%		2.13	%
Risk-free interest rate					5.40	%
Volatility(i)					19	%
Term (years)		3.0			3.0

	Annual		Long Term
2006	Bonus Plan		Incentive Plan
Valuation model	Binomial		Monte Carlo
			Simulation and
			Binomial
Weighted average share price (pence)		831.0		946.0
Expected dividend yield				2.32	%
Risk-free interest rate				4.90	%
Volatility(i)				20	%
Term (years)		2.0		3.0

(i) The expected volatility was determined by calculating the historical volatility of the Company’s share price corresponding to the expected life of the share award.

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Movements in the awards and options outstanding under the schemes are as follows:

	Annual			Long Term
	Bonus Plan			Incentive Plan
	Number of shares			Number of shares
	(thousands)
Outstanding at January 1, 2006		829			10,634
Granted		607			4,277
Vested		(328	)		(1,395	)
Share capital consolidation		(50	)		—
Lapsed or canceled		(57	)		(2,191	)
Outstanding at December 31, 2006		1,001			11,325
Granted		675			3,539
Vested		(418	)		(1,694	)
Share capital consolidation		(68	)		—
Lapsed or canceled		(86	)		(1,707	)
Outstanding at December 31, 2007		1,104			11,463
Granted		662			5,061
Vested		(472	)		(2,752	)
Lapsed or canceled		(5	)		(2,619	)
Outstanding at December 31, 2008		1,289			11,153
Fair value of awards granted during the year (cents)
At December 31, 2008		1,436.0			870.4
At December 31, 2007		2,387.4			910.0
At December 31, 2006		1,644.6			527.7
Weighted average remaining contract life (years)
At December 31, 2008		1.6			1.2
At December 31, 2007		1.5			1.1
At December 31, 2006		1.0			1.3

The above awards do not vest until the performance and service conditions have been met.

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	Sharesave Plan							Executive Share Option Plan
						Weighted							Weighted
	Number of			Range of		average		Number of			Range of		average
	shares			option prices		option price		shares			option prices		option price
	(thousands)			(pence)		(pence)		(thousands)			(pence)		(pence)
Outstanding at January 1, 2006		864			420.5		420.5		22,619			308.5-619.8		465.4
Exercised		(389	)		420.5		420.5		(8,365	)		308.5-619.8		438.7
Lapsed or canceled		(310	)		420.5		420.5		(175	)		345.6-619.8		404.6
Outstanding at December 31, 2006		165			420.5		420.5		14,079			308.5-619.8		482.2
Exercised		(101	)		420.5		420.5		(5,568	)		308.5-619.8		471.9
Lapsed or canceled		(7	)		420.5		420.5		(317	)		438.0-619.8		526.8
Outstanding at December 31, 2007		57			420.5		420.5		8,194			308.5-619.8		487.4
Exercised		(3	)		420.5		420.5		(353	)		434.2-619.8		543.6
Lapsed or canceled		(5	)		420.5		420.5		(206	)		349.1-593.2		431.3
Outstanding at December 31, 2008		49			420.5		420.5		7,635			308.5-619.8		486.3
Options exercisable
At December 31, 2008		—			—		—		7,635			308.5-619.8		486.3
At December 31, 2007		—			—		—		6,583			308.5-619.8		455.0
At December 31, 2006		—			—		—		6,002			308.5-619.8		430.2

Included within the options outstanding under the Executive Share Option Plan are options over 2,424,605 (2007 2,696,883, 2006 4,055,674) shares that have not been recognized in accordance with IFRS 2 as the options were granted on or before November 7, 2002. These options, relating to former Six Continents share schemes, have not been subsequently modified and therefore do not need to be accounted for in accordance with IFRS 2.

The weighted average share price at the date of exercise for share options vested during the year was 815.0 pence. The closing share price on December 31, 2008 was 562.0 pence and the range during the year was 447.5 pence to 865.0 pence per share.

Summarized information about options outstanding at December 31, 2008 under the share option schemes is as follows:

	Options outstanding
			Weighted
			average		Weighted
	Number		remaining		average
	outstanding		contract life		option price
	(thousands)		(years)		(pence)
Range of exercise prices (pence)
Sharesave Plan
420.5		49		0.3		420.5
Executive Share Option Plan
308.5 to 349.1		526		1.3		347.6
422.8 to 494.2		5,574		4.3		462.7
619.8		1,535		6.3		619.8
		7,635		4.5		486.3

At December 31, 2008 the options outstanding under the Sharesave Plan are not exercisable; those under the Executive Share Option Plan are exercisable.

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Note 25 — Deferred tax payable

																Other
	Property,			Deferred												short-term
	plant and			gains on						Employee			Intangible			temporary
	equipment			loan notes			Losses			benefits*			assets			differences**			Total
										($ million)
At January 1, 2007		233			180			(175	)		(28	)		33			(84	)		159
Income statement		3			(8	)		(6	)		7			6			(60	)		(58	)
Statement of recognized income and expense		—			—			—			(11	)		—			54			43
Exchange and other adjustments		12			3			(9	)		—			3			1			10
At December 31, 2007		248			175			(190	)		(32	)		42			(89	)		154
Income statement		(7	)		—			13			18			(8	)		(8	)		8
Statement of recognized income and expense		—			—			—			(21	)		—			2			(19	)
Exchange and other adjustments		(15	)		(33	)		36			2			(6	)		(6	)		(22	)
At December 31, 2008		226			142			(141	)		(33	)		28			(101	)		121

	At
	December 31,
	2008		2007*
	($ million)
Analyzed as:
Deferred tax payable		117		148
Liabilities classified as held for sale		4		6
At December 31		121		154

*	Restated for IFRIC 14 (see page F-11).
**	Other short-term temporary differences relate primarily to provisions and accruals and share-based payments.

Deferred gains on loan notes includes $55 million (2007 $55 million) which is expected to fall due for payment in 2011.

The deferred tax asset of $141 million (2007 $190 million) recognized in respect of losses includes $87 million (2007 $120 million) in respect of capital losses available to be utilized against the realization of capital gains which are recognized as a deferred tax liability and $54 million (2007 $70 million) in respect of revenue tax losses. Revenue losses include $nil (2007 $7 million) in respect of losses which arose during a period of hotel refurbishment and which are expected to be utilized against future operating profit.

Tax losses with a net tax value of $553 million (2007 $384 million), including capital losses with a value of $160 million (2007 $220 million), have not been recognized. These losses may be carried forward indefinitely with the exception of $1 million which expires after three years (2007 $1 million which expires after four years). Deferred tax assets with a net tax value of $4 million (2007 $9 million) in respect of share-based payments, $13 million (2007 $13 million) in respect of employee benefits and $8 million (2007 $27 million) in respect of other items have not been recognized. These losses and other deferred tax assets have not been recognized as the Group does not anticipate being able to offset these against future profits or gains in order to realize any economic benefit in the foreseeable future. However, future benefits may arise depending on future profits arising or on the outcome of EU case law and legislative developments.

At December 31, 2008 the Group has not provided deferred tax in relation to temporary differences associated with post-acquisition undistributed earnings of subsidiaries. Quantifying the temporary differences is not practical.

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However, on the basis that the Group is in a position to control the timing and realization of these temporary differences, no material tax consequences are expected to arise.

Note 26 — Minority equity interest

	Year ended December 31,
	2008		2007
	($ million)
At January, 1		6		16
Disposal of hotels (Note 11)		—		(12	)
Exchange and other adjustments		1		2
At December, 31		7		6

Note 27 — Operating leases

During the year ended December 31, 2008, $61 million (2007 $64 million, 2006 $72 million) was recognized as an expense in the Consolidated Income Statement in respect of operating leases, net of amounts borne by the system funds.

Total commitments under non-cancelable operating leases are as follows:

	At
	December 31,
	2008		2007
	($ million)
Due within one year		56		58
One to two years		50		38
Two to three years		47		32
Three to four years		40		30
Four to five years		33		22
More than five years		322		218
		548		398

Included above, are commitments of $11 million (2007 $9 million) which will be borne by the system funds.

The average remaining term of these leases, which generally contain renewal options, is approximately 18 years (2007 17 years). No material restrictions or guarantees exist in the Group’s lease obligations.

Note 28 — Capital and other commitments

	At
	December 31,
	2008		2007
	($ million)
Contracts placed for expenditure on property, plant and equipment not provided for in the financial statements		40		20

On October 24, 2007, the Group announced a worldwide relaunch of its Holiday Inn brand family. In support of this relaunch, IHG will make a non-recurring revenue investment of $60 million which will be charged to the Consolidated Income Statement as an exceptional item, $35 million has been charged in 2008.

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Note 29 — Contingencies

	At December 31,
	2008		2007
	($ million)
Contingent liabilities not provided for in the financial statements relating to guarantees		12		10

In limited cases, the Group may provide performance guarantees to third-party owners to secure management contracts. The maximum exposure under such guarantees is $249 million (2007 $243 million). It is the view of the Directors that, other than to the extent that liabilities have been provided for in these financial statements, such guarantees are not expected to result in material financial loss to the Group.

As of December 31, 2008, the Group had outstanding letters of credit of $42 million (2007 $62 million) mainly relating to self-insurance programs.

The Group may guarantee loans made to facilitate third-party ownership of hotels in which the Group has an equity interest and also a management contract. As of December 31, 2008, the Group was a guarantor of loans which could amount to a maximum of $46 million (2007 $49 million).

The Group has given warranties in respect of the disposal of certain of its former subsidiaries and hotels. It is the view of the Directors that, other than to the extent that liabilities have been provided for in these financial statements, such warranties are not expected to result in material financial loss to the Group.

Note 30 — Related party disclosures

Key management personnel comprises the Board and Executive Committee.

	Year ended December 31,
	2008		2007		2006
	($ million)
Total compensation of key management personnel
Short-term employment benefits		18.4		18.9		17.5
Post-employment benefits		0.7		0.9		0.9
Equity compensation benefits		12.8		18.2		14.5
		31.9		38.0		32.9

There were no transactions with key management personnel during the years ended December 31, 2008, 2007 or 2006.

F-69

Note 31 — Acquisition of subsidiary

On December 1, 2006, the Group acquired a 75% interest in ANA Hotels & Resorts Co., Ltd (subsequently renamed IHG ANA Hotels Group Japan LLC), a hotel management company based in Japan.

	Carrying
	values			Fair
	pre-acquisition			value
	($ million)
Intangible assets		2			15
Current assets (excluding cash and cash equivalents)		7			7
Cash and cash equivalents		7			7
Trade and other payables		(5	)		(5	)
Current tax payable		(2	)		(2	)
Deferred tax payable		–			(2	)
		9			20
Minority interest					(6	)
Net assets acquired					14
Goodwill on acquisition					4
Consideration, satisfied in cash (including costs of $4 million)					18
Cash and cash equivalents acquired					(7	)
Net cash outflow					(11	)

Management contracts acquired were recognized as intangible assets at their fair value. The residual excess over the net assets acquired was recognized as goodwill.

F-70

INTERCONTINENTAL HOTELS GROUP PLC

SCHEDULE II

VALUATION AND QUALIFYING ACCOUNTS

			Additions
	Balance at		charged to								Balance at
	beginning		costs and		Exchange						end of
	of period		expenses		differences			Deductions			period
					($ million)
Year ended December 31, 2008
Provisions for bad and doubtful debts		96		28		—			(14	)		110
Year ended December 31, 2007
Provisions for bad and doubtful debts		85		23		—			(12	)		96
Year ended December 31, 2006
Provisions for bad and doubtful debts		81		29		2			(27	)		85
Year ended December 31, 2005
Provisions for bad and doubtful debts		83		25		(2	)		(25	)		81

S-1

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

INTERCONTINENTAL HOTELS GROUP PLC
(Registrant)

By:  /s/  Richard Solomons

Name:     Richard Solomons

Title:  Finance Director

Date: April 7, 2009

EX-1

Exhibit 1

No. 5134420

The Companies Act 2006
Company Limited by Shares

INTERCONTINENTAL HOTELS GROUP PLC

MEMORANDUM OF ASSOCIATION

Linklaters

One Silk Street
London EC2Y 8HQ

Telephone (44-20) 7456 2000
Facsimile (44-20) 7456 2222
Ref Matthew Bland/Daniel Simons

Memorandum altered and Articles of Association adopted with effect from 27 June 2005 pursuant to a Special Resolution of the
Company passed on 15 June 2005. By Special Resolutions of the Company passed on 1 June 2007 and 30 May 2008 with
effect from 1 October 2008, the Articles of Association were further amended.

- 1 -

THE COMPANIES ACT 2006

COMPANY LIMITED BY SHARES

MEMORANDUM OF ASSOCIATION

OF

INTERCONTINENTAL HOTELS GROUP PLC

1	The Company’s name is “InterContinental Hotels Group PLC”.1
2	The Company is to be a public company.
3	The Company’s registered office is to be situated in England and Wales.
4	The objects for which the Company is established are:-

(A)	To acquire, purchase and take over shares in the company formerly known as InterContinental Hotels Group PLC (registered number 4551528) and its subsidiaries and subsidiary undertakings and to carry on business as an investment holding company and to control and co-ordinate the business of any companies in which the Company is for the time being interested.
(B)	To acquire (whether by original subscription, tender, purchase, exchange, underwriting or otherwise and whether conditionally or otherwise) shares or stocks, debentures, debenture stock, bonds, obligations or any other securities (and any options or rights in respect thereof or interests therein) issued or guaranteed by any other corporation constituted or carrying on business in any part of the world and whether or not engaged or concerned in the same or similar trades or occupations as those carried on by the Company or its subsidiaries and the debentures, debenture stock, bonds, obligations or any other security issued or guaranteed by any government, sovereign ruler, commissioner, public body or authority, whether supreme, local or otherwise in any part of the world and whether such shares, stocks, debentures, debenture stocks, bonds, obligations or securities are or are not fully paid up and to make payments thereon as called up or in advance of calls or otherwise and to hold the same with a view to investment or to sell, exchange or otherwise dispose of the same and to buy and sell foreign exchange.
(C)	To carry on all or any of the businesses of licensed victuallers, hotel keepers, inn-keepers, beer-house keepers, restaurant keepers, lodging-house keepers, caterers and purveyors of refreshments, refreshment contractors, refreshment room

¹ The Company was incorporated as Hackremco (No. 2154) Limited on 21 May 2004. On 24 March 2005 the name of the Company was changed to New InterContinental Hotels Group Limited. On 27 April 2005, the Company re-registered as a public limited company and its name was changed to New InterContinental Hotels Group PLC with effect from that date. With effect from 27 June 2005, the name of the Company was changed to InterContinental Hotels Group PLC.

	proprietors, sugar merchants, tobacconists, and the business of owning, leasing, managing and franchising hotels and lodging houses of all kinds.
(D)	To manufacture, buy, sell, improve, treat, preserve, fine, aerate, mineralise, bottle and otherwise deal in minerals and aerated waters and other liquids of every description; and to produce, buy, sell and deal in all materials and things capable of being used in connection with any such business aforesaid; and to manufacture, buy, sell and deal in casks, kegs, bottles and other containers of all kinds and plant, machines, apparatus and appliances capable of being used in connection with any such business as aforesaid.
(E)	To grow, manufacture, buy, sell, manipulate, and deal both wholesale and retail in commodities, articles and things of all kinds which can conveniently be dealt in by the Company in connection with any of its objects.
(F)	To carry on any other business or activity of any nature whatsoever which may seem to the Directors to be capable of being conveniently or advantageously carried on in connection or conjunction with any business of the Company hereinbefore or hereinafter authorised or to be expedient with a view directly or indirectly to enhancing the value of or to rendering profitable or more profitable any of the Company’s assets or utilising its skills, know-how or expertise.
(G)	To carry on any of its business by or through a subsidiary or subsidiaries and to form or establish in any part of the world any company or companies for the purpose of carrying on as principal or as agent for the Company any business herein authorised or which may seem conducive to the Company’s interests and to subscribe for, hold and deal with the shares of any company that may be so formed or established and to guarantee the due performance of its obligations and to transfer to any such company any part or branch of its business.
(H)	To purchase, acquire, rent, build, construct, alter, remove, replace, equip, execute, carry out, improve, work, develop, administer, maintain, manage or control any freehold, leasehold or other property and, in particular, breweries, hotels, restaurants, licensed premises, cafes, bars or refreshment saloons and the goodwill of any business carried on therein and the stock-in-trade, plant, machinery or effects thereof or thereupon and any other buildings, structures or facilities of all kinds, whether the same be required for the purposes of the Company or for sale or hire to or in return for any consideration from any other company, firm or persons, and to contribute to or assist in or carry out any part of any such operations.
(I)	To purchase or otherwise acquire for any estate or interest any property (real or personal) or assets or any concessions, licences, grants, patents, trade marks, copyrights or other exclusive or non-exclusive rights of any kind and to hold, develop and turn to account and deal with the same in such manner as may be thought fit, and to make experiments and tests and to carry on all kinds of research work.
(J)	To borrow and raise money and to secure or discharge any debt or obligation of or binding on the Company in such manner as may be thought fit and in particular by mortgage and charges upon all or any part of the undertaking, property and assets (present and future) and the uncalled capital of the Company, or by the creation and issue on such terms and conditions as may be thought fit of debentures, debenture stock or other securities of any description.
(K)	To draw, make, accept, endorse, discount, negotiate, execute, and issue, and to buy, sell and deal with bills of exchange, promissory notes, and other negotiable or transferable instruments or securities.

3

(L)	To amalgamate or enter into partnership or any joint purpose or profit/loss-sharing arrangement or other association with and to co-operate in any way with or assist or subsidise any company, firm, person or body, and to purchase or otherwise acquire and undertake all or any part of the business, property and liabilities of any company, firm, person or body carrying on any business which the Company is authorised to carry on or possessed of any property suitable for the purposes of the Company.
(M)	To promote, or join in the promotion of, any company, whether or not having objects similar to those of the Company.
(N)	To pay all preliminary expenses of the Company and any company promoted by the Company or any company in which this Company is or may contemplate being interested, including in such preliminary expenses all or any part of the costs and expenses of owners of any business or property acquired by the Company.
(O)	To advance, lend or deposit money or give credit to or with any company, firm or person on such terms as may be thought fit and with or without security.
(P)	To issue any securities which the Company has power to issue for any other purpose by way of security or indemnity or in satisfaction of any liability undertaken or agreed to be undertaken by the Company.
(Q)	To guarantee or give indemnities or provide security, whether by personal covenant or by mortgage or charge upon all or any part of the undertaking, property and assets (present and future) and the uncalled capital of the Company, or by all or any such methods, for the performance of any contracts or obligations, and the payment of capital or principal (together with any premium) and dividends or interest on any             shares, debentures or other securities, of any person, firm or company including (without limiting the generality of the foregoing) any company which is for the time being a holding company of the Company or another subsidiary of any such holding company or is associated with the Company in business.
(R)	To sell, lease, grant licenses, easements and other rights over, and in any other manner deal with or dispose of, the undertaking, property, assets, rights and effects of the Company or any part thereof for such consideration as may be thought fit, and in particular for stocks, shares or securities of any other company whether fully or partly paid up.
(S)	To procure the registration, recognition or incorporation of the Company in or under the laws of any territory outside England.
(T)	To subscribe, or guarantee money for, any national, charitable, benevolent, public, general or useful object or for any exhibition, or for any purpose which may be considered likely directly or indirectly to further the interests of the Company or of its members.
(U)	(i) To establish and maintain or contribute to any pension or superannuation funds for the benefit of, and to give or procure the giving of donations, gratuities, pensions, allowances or emoluments to, any individuals who are or were at any time in the employment or service of the Company or of any associated company, or who are or were at any time directors or officers of the Company or of any associated company, and the wives, widows, families and dependants of any such individuals; to establish and subsidise or subscribe to any institutions, associations, clubs or funds which may be considered likely to benefit any such persons or to further the interests of the Company or of any associated company; and to make payments for or towards the insurance of any such persons.

4

(ii) To establish and maintain, and to lend or contribute to, any scheme for encouraging or facilitating the holding of shares or debentures or other securities in the Company or any associated company by or for the benefit of its employees or former employees, or those of any associated company, or by or for the benefit of such other persons as may for the time being be permitted by law, or any scheme for sharing profits with its employees or those of its associated companies, and (so far as for the time being permitted by law) to lend money to employees of the Company or of any associated company with a view to enabling them to acquire shares in the Company or any associated company.

(iii) (a) To purchase and maintain insurance for or for the benefit of any persons who are or were at any time directors, officers or employees or auditors of the Company, or of any associated company, or who are or were at any time trustees of any pension fund or employees’ share scheme in which any employees of the Company or of any associated company are interested, including (without prejudice to the generality of the foregoing) insurance against any liability incurred by such persons in respect of any act or omission in the actual or purported execution and/or discharge of their duties and/or in the exercise or purported exercise of their powers and/or otherwise in relation to the Company or associated company or pension fund; (b) to such extent as may be permitted by law otherwise to indemnify any such person against or from any such liability; and (c) (i) to provide a Director or officer with funds to meet expenditure incurred or to be incurred by him in defending any criminal or civil proceedings or in connection with any application under those provisions of the Companies Act 1985 referred to in Section 337A(2) of that Act and (ii) to do anything to enable a Director to avoid incurring such expenditure.

(iv) In this paragraph (U):

(a) an “associated company” is any company (i) which is the Company’s holding company or (ii) in which the Company or its holding company or any of the predecessors of the Company or of such holding company has any interest whether direct or indirect or (iii) which is in any way allied to or associated with the Company or its holding company or any of the predecessors of the Company or of such holding company, or (iv) which is a subsidiary undertaking of any other associated company; and

(b) “holding company” and “subsidiary undertaking” have the same meanings as in the Companies Act 1985 as amended by the Companies Act 1989.

(V)	To distribute among members of the Company in specie or otherwise, by way of dividend or bonus or by way of reduction of capital, all or any of the property or assets of the Company, or any proceeds of sale or other disposal of any property or assets of the Company, with and subject to any incident authorised and consent required by law.
(W)	To do all or any of the things and matters aforesaid in any part of the world, and either as principals, agents, contractors, trustees or otherwise, and by or through trustees, agents, subsidiary companies or otherwise, and either alone or in conjunction with others.
(X)	To do all such other things as may be considered to be incidental or conducive to any of the above objects.

5

And it is hereby declared that the objects of the Company as specified in each of the foregoing paragraphs of this clause (except only if and so far as otherwise expressly provided in any paragraph) shall be separate and distinct objects of the Company and shall not be in any way limited by reference to any other paragraph or the order in which the same occur or the name of the Company.

5	The liability of the members is limited.
6	The share capital of the Company is £100 divided into 100 shares of £1 each.2

² Share capital increased from £100 to £50,100 by the creation of a redeemable preference share of £50,000 by way of a resolution of the Company passed at an Extraordinary General Meeting held on 21 April 2005. By resolutions of the Company passed at an Extraordinary General Meeting held on 20 May 2005, the share capital was further increased from £50,100 to £10,000,050,000 by the creation of 9,999,999,900 additional ordinary shares of £1 each and the ordinary share capital was then consolidated into 1,600,000,000 ordinary shares of £6.25 each. By resolutions of the Company passed at an Extraordinary General Meeting held on 30 June 2005, the share capital was reduced to £160,050,000, divided into 1,600,000,000 ordinary shares of 10p each and one redeemable preference share of £50,000, by reducing the nominal value of each ordinary share from £6.25 to 10p. By a resolution dated 8 September 2005, the share capital was reduced to £160,000,000 by the redemption of one redeemable preference share of £50,000. By resolutions of the Company passed at an Extraordinary General Meeting held on 1 June 2006, the share capital was consolidated into 1,400,000,000 ordinary shares of 11³/₇p each. By resolutions of the Company passed at an Extraordinary General Meeting held on 1 June 2007, the share capital was consolidated into 1,175,000,000 ordinary shares of 13²⁹/₄₇p each.

6

We, the Subscribers to this Memorandum of Association wish to be formed into a Company pursuant to this Memorandum; and we agree to take the number of Shares shown opposite our respective names.

		Number of Shares taken by
Names and Addresses of Subscribers		each Subscriber
1	Hackwood Directors Limited	One
	One Silk Street
	London
	EC2Y 8HQ
	Mark Jackson
	For and on behalf of
	Hackwood Directors Limited
2	Hackwood Secretaries Limited One Silk Street London EC2Y 8HQ	One
	Mark Jackson
	For and on behalf of
	Hackwood Secretaries Limited
	Total Shares Taken:	Two

Dated: 30 September 2002

Witness to the above Signatures:-

J. DAVIES

One Silk Street
London
EC2Y 8HQ

7

No. 5134420

The Companies Act 2006
Company Limited by Shares

INTERCONTINENTAL HOTELS GROUP PLC

ARTICLES OF ASSOCIATION

Linklaters

One Silk Street
London EC2Y 8HQ

Telephone (44-20) 7456 2000
Facsimile (44-20) 7456 2222
Ref Matthew Bland/Daniel Simons

Adopted with effect from 27 June 2005 pursuant to a Special Resolution of the Company passed on 15 June 2005. By Special
Resolutions of the Company passed on 1 June 2007 and 30 May 2008 with effect from 1 October 2008, the Articles of
Association were further amended.

8

Contents

	Article No.		Page No.
Preliminary		1-2		1-6
Share Capital		3-4		6-7
Variation of Rights		5-6		7-8
Alteration of Share Capital		7-11		8-10
Shares		12-16		10-12
Evidence of Title to Securities		17		12
Share Certificates		18-22		12-13
Calls on Shares		23-28		13-14
Forfeiture and Lien		29-36		14-16
Transfer of Shares		37-43		16-19
Transmission of Shares		44-46		19
Untraced Shareholders		47-48		20
General Meetings		49-50		20-21
Notice of General Meetings		51-52		21-22
Overflow of General Meetings		53-55		22
Proceedings at General Meetings		56-66		22-24
Votes of Members		67-72		24-27
Proxies		73-78		27-29
Corporations Acting by Representatives		79		30
Directors		80-88		30-31
Appointment and Retirement of Directors		89-97		31-34
Alternate Directors		98-101		34
Meetings and Proceedings of Directors		102-111		35-41
Borrowing Powers		112-113		42
General Powers of Directors		114-118		42-43
President		119		43
Departmental, Division or Local Directors		120		43-44
Secretary		121		44
The Seal		122-124		44
Record Date		125		44-45
Authentication of Documents		126		45

i

	Article No.		Page No.
Reserves		127		45
Dividends		128-140		45-48
Capitalisation of Profits and Shares		141-142		48-50
Minutes		143		50
Accounts		144-145		50-51
Auditors		146-147		51
Communications with Members		148-155		51-54
Winding up		156-157		54
Directors’ liabilities		158-158B		54-56
Overriding Provisions		159		56-59

ii

The Companies Act 2006

COMPANY LIMITED BY SHARES

Articles of Association

Adopted by Special Resolution passed on 15 June 2005

Further amended by Special Resolutions passed on 1 June 2007
and 30 May 2008 with effect from 1 October 2008

of

INTERCONTINENTAL HOTELS GROUP PLC³

Preliminary

1	The regulations in Table A in The Companies (Tables A to F) Regulations 1985 and in any Table A applicable to the Company under any former enactment relating to companies shall not apply to the Company.
2	In these Articles (if not inconsistent with the subject or context) the words and expressions set out below shall have the following meanings:
	“Auditors” means the auditors for the time being of the Company.
	“Company Communications Provisions” shall have the same meaning as in the Companies Acts.
	“in writing” means written or produced by any substitute for writing (including anything in electronic form) or partly one and partly another.
	“London Stock Exchange” means London Stock Exchange plc.
	“month” means calendar month.
	“Office” means the registered office of the Company for the time being.
	“Operator” means CRESTCo Limited or such other person as may for the time being be approved by H.M. Treasury as Operator under the Regulations.
	“Operator-instruction” means a properly authenticated dematerialised instruction attributable to the Operator.
	“paid” means paid or credited as paid.

³ The Company was incorporated as Hackremco (No. 2154) Limited on 21 May 2004. On 24 March 2005 the name of the Company was changed to New InterContinental Hotels Group Limited. On 27 April 2005, the Company re-registered as a public limited company and its name was changed to New InterContinental Hotels Group PLC with effect from that date. With effect from 27 June 2005, the name of the Company was changed to InterContinental Hotels Group PLC.

1

“participating security” means a security title to units of which is permitted by the Operator to be transferred by means of a relevant system.

“Register” means the register of members of the Company.

“Regulations” means the Uncertificated Securities Regulations 2001.

“relevant system” means a computer-based system, and procedures, which enable title to units of a security to be evidenced and transferred without a written instrument pursuant to the Regulations.

“Seal” means the Common Seal of the Company.

“Securities Seal” means the official seal kept by the Company for sealing securities issued by the Company, or for sealing documents creating or evidencing securities so issued, as permitted by the Companies Acts.

“Statutes” means the Companies Acts, the Regulations and every other enactment (to the extent the same is in force) concerning companies and affecting the Company.

“these Articles” means these Articles of Association as from time to time altered.

“Transfer Office” means the place where the Register is situated for the time being.

“United Kingdom” means the United Kingdom of Great Britain and Northern Ireland.

“UK Listing Authority” means the Financial Services Authority in its capacity as competent authority for official listing under Part VI of the Financial Services and Markets Act 2000.

“year” means calendar year.

The expression “address” includes any number or address (including in the use of any Uncertificated Proxy Instruction permitted under Article 75, an identification number of a participant in the relevant system) used for the purposes of sending or receiving notices, documents or information by electronic means and/or by means of a website.

The expression “Companies Acts” shall have the meaning given thereto by Section 2 of the Companies Act 2006 but shall only extend to provisions which are in force at the relevant date.

The expressions “hard copy form”, “electronic form” and “electronic means” shall have the same respective meanings as in the Company Communications Provisions.

The expressions “debenture” and “debenture holder” shall respectively include “debenture stock” and “debenture stockholder”.

The expression “Director” shall include all the directors of the Company.

The expression “Group” in relation to moneys borrowed means the Company and its subsidiary undertakings for the time being.

The expression “moneys borrowed” shall be deemed to include (to the extent that the same would not otherwise fall to be taken into account):

(i) the principal amount of any debentures, as defined in Section 744 of the Companies Act 1985 and any fixed premium payable on final repayment thereof save to the extent that such amounts otherwise fall to be included as moneys borrowed;

2

(ii)	the principal amount raised by the acceptance of bills by the Company or any subsidiary (not being acceptance of trade bills for the purchase of goods in the ordinary course of business) or by any bank or accepting house under any acceptance credit opened on behalf of the Company or any subsidiary;
(iii)	the nominal amount of any share capital and the principal amount of any other debentures or other borrowed moneys (together with any fixed premium payable on final redemption or repayment) the redemption or repayment of which is guaranteed (or is the subject of an indemnity granted) by the Company or a subsidiary, save to the extent that the amount guaranteed otherwise falls to be included as moneys borrowed;
(iv)	the nominal amount of any paid-up share capital, except ordinary share capital, of a subsidiary which is not for the time being beneficially owned by the Company or a subsidiary;
(v)	the aggregate amount owing by any member of the Group under finance leases (as determined in accordance with any then current International Financial Reporting Standard or otherwise in accordance with United Kingdom generally accepted accounting principles but excluding leaseholds of immovable property);
(vi)	the principal amount of any book debts of any member of the Group which have been sold or agreed to be sold, to the extent that any member of the Group is for the time being liable to indemnify or reimburse the purchaser in respect of any non-payment in respect of such book debts; and
(vii)	any part of the purchase price of any movable or immovable assets acquired by any member of the Group, the payment of which is deferred beyond the date of completion of the conveyance, assignment or transfer of the legal estate to such assets or, if no such conveyance, assignment or transfer is to take place within six months after the date on which the contract for such purchase is entered into or (if later) becomes unconditional, beyond that date;

but shall be deemed not to include:

(viii)	a proportion of the moneys borrowed by any partly-owned subsidiary otherwise than from the Company or a subsidiary equal to the proportion of its ordinary share capital not directly or indirectly attributable to the Company;
(ix)	amounts borrowed and falling to be taken into account as moneys borrowed pending their application for the purpose of repaying the whole or any part of the other moneys borrowed provided that they are so applied within six months of being so borrowed;
(x)	amounts borrowed by the Company or any subsidiary to finance any contract for the sale of goods in respect of which any part of the price receivable is guaranteed by the Export Credit Guarantee Department of the Board of Trade or any institution carrying on similar business to the extent of that part of the contract price guaranteed notwithstanding that such amount is secured by a pledge or charge on the interest in such contract or the underlying goods or bills of exchange or the negotiable instruments drawn or made in connection therewith or the interest in any letters of credit issued or guarantee or indemnity or security held in relation thereto;

3

(xi)	all sums (whether or not carrying interest) deposited with the Company or with any subsidiary by tenants or managers of premises owned by any such company by way of earnest or security for the performance by such tenants or managers of their obligations or by loan clubs or by similar associations;
	and so that:
(xii)	no amount shall be taken into account more than once in the same calculation but subject thereto (i) to (xii) above shall be read cumulatively;
(xiii)	moneys borrowed shall be offset by cash and cash equivalence as determined in accordance with any then current International Financial Reporting Standards or otherwise in accordance with United Kingdom generally accepted accounting principles; and
(xiv)	in determining the amount of any debentures or other moneys borrowed or of any share capital for the purpose of this paragraph there shall be taken into account the nominal or principal amount thereof (or, in the case of partly-paid debentures or             shares, the amount for the time being paid up thereon) together with any fixed or minimum premium payable on final redemption or repayment provided that if moneys are borrowed or shares are issued on terms that they may be repayable or redeemable (or that any member of the Group may be required to purchase them) earlier than their final maturity date (whether by exercise of an option on the part of the issuer or the creditor (or a trustee for the creditor) or the shareholder, by reason of a default or for any other reason) at a premium or discount to their nominal or principal amount then there shall be taken into account the amount (or the greater or greatest of two or more alternative amounts) which would, if those circumstances occurred, be payable on such repayment, redemption or purchase at the date as at which the calculation is being made.

The expression “officer” shall include a Director, manager and the Secretary, but shall not include an auditor.

The expressions “recognised clearing house” and “recognised investment exchange” shall mean any clearing house or investment exchange (as the case may be) granted recognition under the Financial Services and Markets Act 2000.

The expression “Secretary” shall include any person appointed by the Directors to perform any of the duties of the Secretary including, but not limited to, a joint, assistant or deputy Secretary.

The expression “share capital and consolidated reserves” shall mean at any time a sum equal to the aggregate, as shown by the relevant balance sheet, of the amount paid up on the issued or allotted share capital of the Company and the amount standing to the credit of the reserves (including the profit and loss account and any share premium account or capital redemption reserve) of the Company and its subsidiary undertakings included in the consolidation in the relevant balance sheet but after:

(i)	adding back any debit balance on profit and loss account or on any other reserve;
(ii)	excluding any amount taken directly to reserves for taxation;
(iii)	making such adjustments as may be appropriate in respect of any variation in the amount of such paid up share capital and/or any such reserves (other than profit and loss account) subsequent to the date of the relevant balance sheet and so that

4

	for this purpose if any issue or proposed issue of shares by the Company for cash has been underwritten then such shares shall be deemed to have been issued and the amount (including any premium) of the subscription moneys payable in respect thereof (not being moneys payable later than six months after the date of allotment) shall to the extent so underwritten be deemed to have been paid up on the date when the issue of such shares was underwritten (or, if such underwriting was conditional, on the date when it became unconditional);
(iv)	making such adjustments as may be appropriate in respect of any distribution declared, recommended or made by the Company or its subsidiary undertakings (to the extent not attributable directly or indirectly to the Company) out of profits earned up to and including the date of the relevant balance sheet to the extent that such distribution is not provided for in such balance sheet;
(v)	making such adjustments as may be appropriate in respect of any variation in the interests of the Company in its subsidiary undertakings (including a variation whereby an undertaking becomes or ceases to be a subsidiary undertaking) since the date of the relevant balance sheet;
(vi)	if the calculation is required for the purposes of or in connection with a transaction under or in connection with which any undertaking is to become or cease to be a subsidiary undertaking of the Company, making all such adjustments as would be appropriate if such transaction had been carried into effect; and
(vii)	excluding minority interests in subsidiary undertakings to the extent not already excluded.

For the purpose of this definition, the “relevant balance sheet” means, at any time, the latest audited consolidated balance sheet dealing with the state of affairs of the Company and (with or without exceptions) its subsidiary undertakings.

For the purposes of this definition:

(i)	capital allotted shall be treated as issued and any capital already called up or payable at any fixed future date shall be treated as already paid up, and
(ii)	any company which it is proposed shall become a subsidiary shall be treated as if it had already become a subsidiary.

The expression “shareholders’ meeting” shall include both a General Meeting and a meeting of the holders of any class of shares of the Company. The expression “General Meeting” shall include any general meeting of the Company, including any general meeting held as the Company’s annual general meeting in accordance with Section 336 of the Companies Act 2006 (“Annual General Meeting”).

All such provisions of these Articles as are applicable to paid-up shares shall apply to stock, and the words “share” and “shareholder” shall be construed accordingly.

Except where the context otherwise requires, any reference to issued shares of any class (whether of the Company or of any other company) shall not include any shares of that class held as treasury shares.

Words denoting the singular shall include the plural and vice versa. Words denoting the masculine shall include the feminine. Words denoting persons shall include bodies corporate and unincorporated associations.

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References to any statute or statutory provision shall be construed as relating to any statutory modification or re-enactment thereof for the time being in force (whether coming into force before or after the adoption of these Articles).

Except as provided above any words or expressions defined in the Companies Acts or the Regulations shall (if not inconsistent with the subject or context) bear the same meanings in these Articles.

A Special Resolution shall be effective for any purpose for which an Ordinary Resolution is expressed to be required under any provision of these Articles.

References herein to a share (or to a holding of shares) being in uncertificated form or in certificated form are references, respectively, to that share being an uncertificated unit of a security or a certificated unit of a security for the purposes of the Regulations.

Share Capital

3	Amount of Share Capital
	The share capital of the Company at the date of adoption of these Articles is £10,000,050,000 divided into 1,600,000,000 ordinary shares of £6.25 each (“Ordinary Shares”) and one Redeemable Preference Share of £50,000 (the “Redeemable Preference Share”)4. The Ordinary Shares will have attached thereto the rights and privileges and be subject to the limitations and restrictions specified in this Article 3. The Redeemable Preference Share will have attached thereto the rights and privileges and be subject to the limitations and restrictions specified in Article 4.
3.1	Income
	Subject to the rights attached to any other share or class of share, the holders of Ordinary Shares shall be entitled to be paid any profits of the Company available for distribution and determined to be paid by the Directors rateably according to the amounts paid up on such shares.
3.2	Capital
	On a return of capital on winding up or otherwise (except on redemption in accordance with the terms of issue of any share, or purchase by the Company of any share or on a capitalisation issue and subject to the rights of any other class of shares that may be issued) after paying such sums as may be due in priority to holders of any other class of             shares in the capital of the Company, any further such amount shall be paid to the holders of the Ordinary Shares rateably according to the amounts paid up or credited as paid up in respect of each Ordinary Share.

⁴ By resolutions of the Company passed at an Extraordinary General Meeting held on 30 June 2005, the share capital was reduced to £160,050,000, divided into 1,600,000,000 ordinary shares of 10p each and one redeemable preference share of £50,000, by reducing the nominal value of each ordinary share from £6.25 to 10p. By a resolution dated 8 September 2005, the share capital was reduced to £160,000,000 by the redemption of one redeemable preference share of £50,000. By resolutions of the Company passed at an Extraordinary General Meeting held on 1 June 2006, the share capital was consolidated into 1,400,000,000 ordinary shares of 11³/₇p each. By resolutions of the Company passed at an Extraordinary General Meeting held on 1 June 2007, the share capital was consolidated into 1,175,000,000 ordinary shares of 13²⁹/₄₇p each.

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3.3	Voting at General Meetings
	The holders of Ordinary Shares shall be entitled, in respect of their holdings of such             shares, to receive notice of General Meetings and to attend, speak and vote at such meetings in accordance with these Articles.
4	Redeemable Preference Share
	The rights attaching to the Redeemable Preference Share shall be as follows:
4.1	the Redeemable Preference Share shall carry no rights to receive any of the profits of the Company available for distribution by way of dividend or otherwise;
4.2	if there is a return of capital on winding up or otherwise the assets of the Company available for distribution among the members shall be applied first in repaying in full the holder of the Redeemable Preference Share the amount paid up on such share;
4.3	except as provided above the Redeemable Preference Share shall not carry any right to participate in profits or assets of the Company;
4.4	subject to the provisions of the Statutes, the Company may redeem the Redeemable Preference Share at its nominal amount at any time specified by either the Directors or the holder of the Redeemable Preference Share provided always that if the Company shall at any time be unable in compliance with the provisions of the Statutes to redeem the Redeemable Preference Share on the date specified by the Directors of the Company or by the holder of the Redeemable Preference Share then the Company shall redeem such share as soon as it is able to comply with such provisions of the Statutes;
4.5	subject to the provisions of the Statutes, any notice of redemption served shall specify the date fixed for redemption and upon such date the holder of the Redeemable Preference Share shall be bound to present the certificate in respect thereof in order that the same may be cancelled. Upon such delivery the Company shall pay to such holder the amount due to him in respect of such redemption; and
4.6	the holder of the Redeemable Preference Share shall not be entitled to receive notice of or attend and vote at any General Meeting of the Company unless a resolution is to be proposed:

4.6.1	to wind up the Company; or
4.6.2	which varies, modifies, alters or abrogates any of the rights attaching to the Redeemable Preference Share.

Variation of Rights

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Manner of variation of rights

5.1

Whenever the share capital of the Company is divided into different classes of shares, the special rights attached to any class may, subject to the provisions of the Statutes and Article 4.6.2, be varied or abrogated either with the consent in writing of the holders of three-quarters in nominal value of the issued shares of the class or with the sanction of a Special Resolution passed at a separate General Meeting of the holders of the shares of

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	the class (but not otherwise) and may be so varied or abrogated either whilst the Company is a going concern or during or in contemplation of a winding up.
5.2	To every such separate General Meeting all the provisions of these Articles relating to General Meetings of the Company and to the proceedings thereat shall mutatis mutandis apply, except that the necessary quorum shall be two persons at least holding or representing by proxy at least one-third in nominal value of the issued shares of the class (but so that at any adjourned meeting any holder of shares of the class present in person or by proxy shall be a quorum) and that any holder of shares of the class present in person or by proxy may demand a poll and that every such holder shall on a poll have one vote for every share of the class held by him but not otherwise.
5.3	The foregoing provisions of this Article shall apply to the variation or abrogation of the special rights attached to some only of the shares of any class as if each group of shares of the class differently treated formed a separate class the special rights whereof are to be varied.
6	Matters not constituting variation of rights
	The special rights attached to any class of shares having preferential rights shall not unless otherwise expressly provided by the terms of issue thereof be deemed to be varied by the creation or issue of further shares ranking as regards participation in the profits or assets of the Company in some or all respects pari passu therewith but in no respect in priority thereto or the purchase or redemption by the Company of any of its own shares.

Alteration of Share Capital

7	Increase of Share Capital
	The Company may from time to time by Ordinary Resolution increase its capital by such sum to be divided into shares of such amounts as the resolution shall prescribe. All new shares shall be subject to the provisions of the Statutes and of these Articles with reference to allotment, payment of calls, lien, transfer, transmission, forfeiture and otherwise.
8	Consolidation, cancellation and subdivision
	The Company may by Ordinary Resolution:
8.1	consolidate and divide all or any of its share capital into shares of larger amount than its existing shares;
8.2	cancel any shares which, at the date of the passing of the resolution, have not been taken, or agreed to be taken, by any person and diminish the amount of its capital by the amount of the shares so cancelled;
8.3	subdivide its shares, or any of them, into shares of smaller amount than is fixed by the Memorandum of Association (subject, nevertheless, to the provisions of the Statutes), and so that the resolution whereby any share is subdivided may determine that, as between the holders of the shares resulting from such subdivision, one or more of the shares may, as compared with the others, have any such preferred, deferred or other special rights, or be

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	subject to any such restrictions, as the Company has power to attach to unissued or new shares.
9	Proceeds of consolidation and subdivision
	Whenever as a result of a consolidation or subdivision of shares any members would become entitled to fractions of a share, the Directors may, on behalf of those members, sell the shares representing the fractions for the best price reasonably obtainable to any person (including, subject to the provisions of the Statutes, the Company) and distribute the net proceeds of sale in due proportion among those members, and the Directors may authorise some person to transfer the shares to, or in accordance with the directions of, the purchaser. The transferee shall not be bound to see to the application of the purchase money nor shall his title to the shares be affected by any irregularity in or invalidity of the proceedings in reference to the sale. So far as the Statutes allow, the Directors may treat shares of a member in certificated form and in uncertificated form as separate holdings in giving effect to subdivisions and/or consolidations and may cause any shares arising on consolidation or subdivision and representing fractional entitlements to be entered in the Register as shares in certificated form where this is desirable to facilitate the sale thereof.
10	Purchase of own shares
10.1	Subject to the provisions of the Statutes, the Company may purchase, or may enter into a contract under which it will or may purchase, any of its own shares (including any redeemable shares) but so that if there shall be in issue any shares which are admitted to the official list maintained by the UK Listing Authority and which are convertible into equity share capital of the Company of the class proposed to be purchased, then the Company shall not purchase, or enter into a contract under which it will or may purchase, such equity shares unless either:

10.1.1	the terms of issue of such convertible shares include provisions permitting the Company to purchase its own equity shares or providing for adjustment to the conversion terms upon such a purchase; or
10.1.2	the purchase, or the contract, has first been approved by a Special Resolution passed at a separate meeting of the holders of such convertible shares.

10.2	The Company may not exercise any rights in respect of treasury shares held by it, including any rights to attend or vote at meetings, to participate in any offer by the Company to shareholders or to receive any distribution (including in a winding up), but without prejudice to its rights to sell the treasury shares, to transfer the shares for the purposes of or pursuant to an employees’ share scheme, to receive an allotment of shares as fully paid bonus             shares in respect of the treasury shares or to receive any amount payable on redemption of any redeemable treasury shares.
11	Reduction of capital
11.1	Subject to the provisions of the Statutes, the Company may by Special Resolution reduce its share capital or any capital redemption reserve, share premium account or other undistributable reserve in any way.

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11.2 Holders of shares of the Company allotted and issued pursuant to the scheme of arrangement (the “Scheme”) under section 425 of the Companies Act 1985 dated 3 May 2005 between the company formerly known as “InterContinental Hotels Group PLC” (with registered number 4551528) and the holders of its Scheme Shares (as defined in the Scheme) shall be bound by any Special Resolution to reduce or approve the reduction of the capital of the Company in any way duly passed at any Extraordinary General Meeting prior to the Scheme becoming effective.

Shares

12	Rights attaching to shares on issue
	Without prejudice to any special rights previously conferred on the holders of any shares or class of shares for the time being issued, any share in the Company may be issued with such preferred, deferred or other special rights, or subject to such restrictions, whether as regards dividend, return of capital, voting or otherwise, as the Company may from time to time by Ordinary Resolution determine (or, in the absence of any such determination, as the Directors may determine) and subject to the provisions of the Statutes the Company may issue any shares which are, or at the option of the Company or the holder are liable, to be redeemed.
13	Directors’ power to allot securities and to sell treasury shares
13.1	Subject to the provisions of the Statutes relating to authority, pre-emption rights and otherwise and of any resolution of the Company in General Meeting passed pursuant thereto, all unissued shares shall be at the disposal of the Directors and they may allot (with or without conferring a right of renunciation), grant options over or otherwise dispose of them to such persons, at such times and on such terms as they think proper.
13.2	The Directors shall be generally and unconditionally authorised pursuant to, and in accordance with, Section 80 of the Companies Act 1985 to exercise for each Allotment Period all the powers of the Company to allot relevant securities up to a maximum aggregate nominal amount equal to the Section 80 Amount.
13.3	During each Allotment Period the Directors shall be empowered to allot equity securities wholly for cash pursuant to and within the terms of any authority in Article 13.2 above and to sell treasury shares wholly for cash:

13.3.1	in connection with a rights issue; and
13.3.2	otherwise than in connection with a rights issue, up to an aggregate nominal amount equal to the Section 89 Amount,

	as if Section 89(1) of the Companies Act 1985 did not apply to any such allotment or sale.
13.4	By such authority and power the Directors may, during the Allotment Period, make offers or agreements which would or might require securities to be allotted or sold after the expiry of such period.
13.5	For the purposes of this Article 13:

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13.5.1	“Allotment Period” means the period ending on the date of the next Annual General Meeting of the Company or on 1 September 2006, whichever is the earlier, or any other period (not exceeding five years on any occasion) for which the authority conferred by this Article 13 is renewed by Resolution of the Company in General Meeting stating the Section 80 Amount for such period;
13.5.2	“rights issue” means an offer of equity securities open for acceptance for a period fixed by the Directors to (i) holders (other than the Company) of Ordinary Shares on the Register on a record date fixed by the Directors in proportion to their respective holdings (for which purpose holdings in certificated and uncertificated form may be treated as separate holdings) and (ii) other persons so entitled by virtue of the rights attaching to any other equity securities held by them, but subject in both cases to such exclusions or other arrangements as the Directors may deem necessary or expedient in relation to fractional entitlements or legal or practical problems under the laws of, or the requirements of any recognised regulatory body or any stock exchange in, any territory;
13.5.3	“Section 80 Amount” shall, without prejudice to any other authority given to the Directors, for the first Allotment Period be £922,013,888 (provided that if the nominal value of the Ordinary Shares (being relevant securities for the purposes of Section 80 of the Companies Act 1985) has been reduced to ten pence by way of a Court approved reduction of capital, then the Section 80 Amount shall be £14,752,222) or any increased amount fixed by Resolution of the Company in General Meeting; for any other Allotment Period the Section 80 Amount shall be stated in the relevant Resolution renewing the authority conferred by Article 13.2 above for such period or any increased amount fixed by Resolution of the Company in General Meeting;
13.5.4	“Section 89 Amount” shall for the first Allotment Period be £138,302,083 (provided that if the nominal value of the Ordinary Shares (being equity securities for the purposes of Section 89 of the Companies Act 1985) has been reduced to ten pence by way of a Court approved reduction of capital, then the Section 89 Amount shall be £2,212,833) or any increased amount fixed by Special Resolution; for any other Allotment Period the Section 89 Amount shall be that stated in the relevant Special Resolution renewing the power conferred by Article 13.3 above for such period or any increased amount fixed by Special Resolution; and
13.5.5	the nominal amount of any securities shall be taken to be, in the case of rights to subscribe for or to convert any securities into shares of the Company, the nominal amount of such shares which may be allotted pursuant to such rights.

14	Commission on issue of shares
	The Company may exercise the powers of paying commissions conferred by the Statutes to the full extent thereby permitted. The Company may also on any issue of shares pay such brokerage as may be lawful.
15	Renunciation of allotment
	The Directors may at any time after the allotment of any share but before any person has been entered in the Register as the holder:

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15.1	recognise a renunciation thereof by the allottee in favour of some other person and may accord to any allottee of a share a right to effect such renunciation; and/or
15.2	allow the rights represented thereby to be one or more participating securities, in each case upon and subject to such terms and conditions as the Directors may think fit to impose.
16	Trust etc. interests not recognised
	Except as required by law, no person shall be recognised by the Company as holding any share upon any trust, and the Company shall not be bound by or compelled in any way to recognise any equitable, contingent, future or partial interest in any share, any interest in any fractional part of a share or (except only as by these Articles or by law otherwise provided) any other right in respect of any share, except an absolute right to the entirety thereof in the registered holder.

Evidence of Title to Securities

17 Nothing in these Articles shall require title to any securities of the Company to be evidenced or transferred by a written instrument, the regulations from time to time made under the Statutes so permitting. The Directors shall have power to implement any arrangements which they may think fit for such evidencing and transfer which accord with those regulations.

Share Certificates

18	Issue of share certificate
	Every share certificate shall be executed by the Company in such manner as the Directors may decide (which may include use of the Seal or the Securities Seal (or, in the case of shares on a branch register, an official seal for use in the relevant territory) and/or manual or facsimile signatures by one or more Directors) and shall specify the number and class of shares to which it relates and the amount paid up thereon. No certificate shall be issued representing shares of more than one class. No certificate shall normally be issued in respect of shares held by a recognised clearing house or a nominee of a recognised clearing house or of a recognised investment exchange.
19	Joint holder
	In the case of a share held jointly by several persons in certificated form the Company shall not be bound to issue more than one certificate therefor and delivery of a certificate to one of the joint holders shall be sufficient delivery to all.
20	Timing of issue of share certificate
	Any person (except a person to whom the Company is not required by law to issue a certificate) whose name is entered in the Register in respect of any shares in certificated

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	form of any one class upon the issue or transfer to him thereof shall be entitled without payment to a certificate therefor (in the case of issue) within one month (or such longer period as the terms of issue shall provide) after allotment or (in the case of a transfer of fully-paid shares) within 14 days after lodgment of a transfer or (in the case of a transfer of partly-paid shares) within two months after lodgment of a transfer.
21	Balance certificate
	Where some only of the shares comprised in a share certificate are transferred, the old certificate shall be cancelled and, to the extent that the balance is to be held in certificated form, a new certificate for the balance of such shares issued in lieu without charge.
22	Replacement of share certificates
22.1	Any two or more certificates representing shares of any one class held by any member may at his request be cancelled and a single new certificate for such shares issued in lieu without charge.
22.2	If any member shall surrender for cancellation a share certificate representing shares held by him and request the Company to issue in lieu two or more share certificates representing such shares in such proportions as he may specify, the Directors may, if they think fit, comply with such request.
22.3	If a share certificate shall be damaged or defaced or alleged to have been lost, stolen or destroyed, a new certificate representing the same shares may be issued to the holder upon request subject to delivery up of the old certificate or (if alleged to have been lost, stolen or destroyed) compliance with such conditions as to evidence and indemnity and the payment of any exceptional out-of-pocket expenses of the Company in connection with the request as the Directors may think fit.
22.4	In the case of shares held jointly by several persons any such request may be made by any one of the joint holders.

Calls on Shares

23	Power to make calls
	The Directors may from time to time make calls upon the members in respect of any moneys unpaid on their shares (whether on account of the nominal value of the shares or, when permitted, by way of premium) but subject always to the terms of allotment of such shares. A call shall be deemed to have been made at the time when the resolution of the Directors authorising the call was passed and may be made payable by instalments.
24	Liability for calls
	Each member shall (subject to being given at least 14 days’ notice specifying the time or times and place of payment) pay to the Company at the time or times and place so specified, the amount called on his shares. The joint holders of a share shall be jointly and severally liable to pay all calls in respect thereof. A call may be wholly or partly revoked or postponed as the Directors may determine.

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25	Interest on overdue amounts
	If a sum called in respect of a share is not paid before or on the day appointed for payment thereof, the person from whom the sum is due shall pay interest on the sum from the day appointed for payment thereof to the time of actual payment at such rate (not exceeding 3 per cent per annum above the base rate for the time being of Barclays Bank PLC on the date on which payments are made to the Company) as the Directors determine but the Directors shall be at liberty in any case or cases to waive payment of such interest wholly or in part.
26	Other sums due on shares
	Any sum (whether on account of the nominal value of the share or by way of premium) which by the terms of allotment of a share becomes payable upon allotment or at any fixed date shall for all the purposes of these Articles be deemed to be a call duly made and payable on the date on which by the terms of allotment the same becomes payable. In case of non-payment all the relevant provisions of these Articles as to payment of interest and expenses, forfeiture or otherwise shall apply as if such sum had become payable by virtue of a call duly made and notified.
27	Power to differentiate between holders
	The Directors may on the allotment of shares differentiate between the holders as to the amount of calls to be paid and the times of payment.
28	Payment of calls in advance
	The Directors may if they think fit receive from any member willing to advance the same all or any part of the moneys (whether on account of the nominal value of the shares or by way of premium) uncalled and unpaid upon the shares held by him and such payment in advance of calls shall extinguish pro tanto the liability upon the shares in respect of which it is made and upon the money so received (until and to the extent that the same would but for such advance become payable) the Company may pay interest at such rate (not exceeding 3 per cent per annum above the base rate for the time being of Barclays Bank PLC on the date on which payments are made to the Company) as the member paying such sum and the Directors may agree.

Forfeiture and Lien

29	Notice on failure to pay a call
29.1	If a member fails to pay in full any call or instalment of a call on or before the due date for payment thereof, the Directors may at any time thereafter serve a notice on him requiring payment of so much of the call or instalment as is unpaid together with any interest which may have accrued thereon and any expenses incurred by the Company by reason of such non-payment.

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29.2	The notice shall name a further day (not being less than seven days from the date of service of the notice) on or before which and the place where the payment required by the notice is to be made, and shall state that in the event of non-payment in accordance therewith the shares on which the call has been made will be liable to be forfeited.
30	Forfeiture for non-compliance
	If the requirements of any such notice as aforesaid are not complied with, any share in respect of which such notice has been given may at any time thereafter, before payment of all calls and interest and expenses due in respect thereof has been made, be forfeited by a resolution of the Directors to that effect. Such forfeiture shall include all dividends declared in respect of the forfeited share and not actually paid before forfeiture. The Directors may accept a surrender of any share liable to be forfeited hereunder.
31	Disposal of forfeited share
	A share so forfeited or surrendered shall become the property of the Company and may be sold, re-allotted or otherwise disposed of either to the person who was before such forfeiture or surrender the holder thereof or entitled thereto or to any other person upon such terms and in such manner as the Directors shall think fit and at any time before a sale, re-allotment or disposal the forfeiture or surrender may be cancelled on such terms as the Directors think fit. The Directors may, if necessary, authorise some person to transfer a forfeited or surrendered share to any such other person as aforesaid.
32	Holder to remain liable despite forfeiture
	A person whose shares have been forfeited or surrendered shall cease to be a member in respect of the shares and shall, in the case of shares held in certificated form, surrender to the Company for cancellation the certificate for such shares. Such person shall nevertheless remain liable to pay to the Company all moneys which at the date of forfeiture or surrender were presently payable by him to the Company in respect of the shares with interest thereon at 3 per cent per annum above the base rate for the time being of Barclays Bank PLC on the date on which payments are made to the Company (or such lower rate as the Directors may determine) from the date of forfeiture or surrender until payment. The Directors may at their absolute discretion enforce payment without any allowance for the value of the shares at the time of forfeiture or surrender or for any consideration received on their disposal. They may also waive payment in whole or in part.
33	Lien on partly-paid shares
	The Company shall have a first and paramount lien on every share (not being a fully-paid share) for all moneys (whether presently payable or not) called or payable at a fixed time in respect of such share and the Directors may waive any lien which has arisen and may resolve that any share shall for some limited period be exempt wholly or partially from the provisions of this Article.

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34	Sale of shares subject to lien
	The Company may sell in such manner as the Directors think fit any share on which the Company has a lien, but no sale shall be made unless some sum in respect of which the lien exists is presently payable nor until the expiration of 14 days after a notice in writing demanding payment of the sum presently payable and giving notice of intention to sell the share in default of payment shall have been given to the holder for the time being of the share or the person entitled thereto by reason of his death or bankruptcy or otherwise by operation of law.
35	Proceeds of sale of shares subject to lien
	The net proceeds of such sale after payment of the costs of such sale shall be applied in or towards payment or satisfaction of the amount in respect whereof the lien exists so far as the same is then payable and any residue shall, upon surrender (in the case of shares held in certificated form) to the Company for cancellation of the certificate for the shares sold and subject to a like lien for sums not presently payable as existed upon the shares prior to the sale, be paid to the person entitled to the shares at the time of the sale. For the purpose of giving effect to any such sale the Directors may authorise some person to transfer the shares sold to, or in accordance with the directions of, the purchaser.
36	Evidence of forfeiture
	A statutory declaration that the declarant is a Director or the Secretary and that a share has been duly forfeited or surrendered or sold to satisfy a lien of the Company on a date stated in the declaration shall be conclusive evidence of the facts therein stated as against all persons claiming to be entitled to the share. Such declaration shall (subject to the relevant share transfer being made, if the same be required) constitute a good title to the share. The person to whom the share is sold, re-allotted or disposed of shall not be bound to see to the application of the consideration (if any). The title of such person to the share shall not be affected by any irregularity or invalidity in the proceedings relating to the forfeiture, surrender, sale, re-allotment or disposal of the share.

Transfer of Shares

37	Form of transfer
37.1	Subject to the provisions of Article 17, all transfers of shares which are in certificated form may be effected by transfer in writing in any usual or common form or in any other form acceptable to the Directors and may be under hand only. The instrument of transfer shall be signed by or on behalf of the transferor and (except in the case of fully-paid shares) by or on behalf of the transferee. The transferor shall remain the holder of the shares concerned until the name of the transferee is entered in the Register in respect thereof.
37.2	All transfers of shares which are in uncertificated form may, unless the Regulations otherwise provide, be effected by means of a relevant system.

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38	Closure of Register
	The registration of transfers may be suspended at such times and for such periods as the Directors may from time to time determine and either generally or in respect of any class of shares except that, in respect of any shares which are participating securities, the Register shall not be closed without the consent of the Operator. The Register shall not be closed for more than 30 days in any year.
39	Right to refuse registration
39.1	The Directors may decline to recognise any instrument of transfer relating to shares in certificated form unless:

39.1.1	the instrument of transfer is in respect of only one class of share;
39.1.2	is lodged (duly stamped if required) at the Transfer Office accompanied by the relevant share certificate(s); and
39.1.3	when lodged it is accompanied by such other evidence as the Directors may reasonably require to show the right of the transferor to make the transfer or, if the instrument of transfer is executed by some other person on his behalf, the authority of that person to do so. Provided that, where any such shares are admitted to the official list maintained by the UK Listing Authority, such discretion may not be exercised in such a way as to prevent dealings in the shares of that class from taking place on an open and proper basis. In the case of a transfer of shares in certificated form by a recognised clearing house or a nominee of a recognised clearing house or of a recognised investment exchange the lodgment of share certificates will only be necessary if and to the extent that certificates have been issued in respect of the shares in question.

39.2	The Directors may, in the case of shares in certificated form, in their absolute discretion refuse to register any transfer of shares (not being fully-paid shares) provided that, where any such shares are admitted to the official list maintained by the UK Listing Authority, such discretion may not be exercised in such a way as to prevent dealings in the shares of that class from taking place on an open and proper basis.
39.3	The Directors may also refuse to register an allotment or transfer of shares (whether fully-paid or not) in favour of more than four persons jointly.
39.4	If the Directors refuse to register an allotment or transfer of shares they shall as soon as is practicable and in any event within two months after the date on which:

39.4.1	the letter of allotment or instrument of transfer was lodged with the Company (in the case of shares held in certificated form); or
39.4.2	the Operator-instruction was received by the Company (in the case of shares held in uncertificated form), send to the allottee or transferee notice of the refusal giving reasons for the refusal.

40	Instruments of transfer
	All instruments of transfer which are registered may be retained by the Company.

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41 No fee on registration

	No fee will be charged by the Company in respect of the registration of any transfer or any document relating to or affecting the title to any shares or otherwise for making any entry in the Register affecting the title to any shares.
42	Destruction of documents
42.1	Subject to compliance with the rules (as defined in the Regulations) applicable to shares of the Company in uncertificated form, the Company shall be entitled to destroy:

42.1.1	all instruments of transfer or other documents (whether in hard copy or electronic form) which have been registered or on the basis of which registration was made at any time after the expiration of six years from the date of registration thereof;
42.1.2	all dividend mandates and notifications of change of address at any time after the expiration of two years from the date of recording thereof;
42.1.3	all share certificates which have been cancelled at any time after the expiration of one year from the date of the cancellation thereof.

42.2 It shall conclusively be presumed in favour of the Company that:

42.2.1	every entry in the Register purporting to have been made on the basis of an instrument of transfer or other document so destroyed or deleted was duly and properly made;
42.2.2	every instrument of transfer so destroyed or deleted was a valid and effective instrument duly and properly registered;
42.2.3	every share certificate so destroyed was a valid and effective certificate duly and properly cancelled; and
42.2.4	every other document hereinbefore mentioned so destroyed or deleted was a valid and effective document in accordance with the recorded particulars thereof in the books or records of the Company.

42.3 For the purposes of this Article:

42.3.1	the foregoing provisions shall apply only to the destruction or deletion of a document in good faith and without notice of any claim (regardless of the parties thereto) to which the document might be relevant;
42.3.2	nothing herein contained shall be construed as imposing upon the Company any liability in respect of the destruction or deletion of any such document earlier than as aforesaid or in any other circumstances which would not attach to the Company in the absence of this Article;
42.3.3	any document referred to above may, subject to the Statutes, be destroyed before the end of the relevant period so long as a copy of such document (whether made electronically, by microfilm, by digital imaging or by any other means) has been made and is retained until the end of the relevant period; and
42.3.4	references herein to the destruction or deletion of any document include references to the disposal thereof in any manner.

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43	Further provisions on shares in uncertificated form
43.1	Subject to the Statutes and the rules (as defined in the Regulations), and apart from any class of wholly dematerialised security, the Directors may determine that any class of shares may be held in uncertificated form and that title to such shares may be transferred by means of a relevant system or that shares of any class should cease to be held and transferred as aforesaid.
43.2	The provisions of these Articles shall not apply to shares of any class which are in uncertificated form to the extent that such Articles are inconsistent with:

43.2.1	the holding of shares of that class in uncertificated form;
43.2.2	the transfer of title to shares of that class by means of a relevant system; or
43.2.3	any provision of the Regulations.

Transmission of Shares

44	Persons entitled on death
	In case of the death of a member, the survivors or survivor where the deceased was a joint holder, and the executors or administrators of the deceased where he was a sole or only surviving holder, shall be the only persons recognised by the Company as having any title to his interest in the shares, but nothing in this Article shall release the estate of a deceased member (whether sole or joint) from any liability in respect of any share held by him.
45	Election by persons entitled by transmission
	Any person becoming entitled to a share in consequence of the death or bankruptcy of a member or otherwise by operation of law may (subject as hereinafter provided) upon supplying to the Company such evidence as the Directors may reasonably require to show his title to the share either be registered himself as holder of the share upon giving to the Company notice in writing to that effect or transfer such share to some other person. All the limitations, restrictions and provisions of these Articles relating to the right to transfer and the registration of transfers of shares shall be applicable to any such notice or transfer as aforesaid as if the notice or transfer were a transfer made by the member registered as the holder of any such share.
46	Rights of persons entitled by transmission
	Save as otherwise provided by or in accordance with these Articles, a person becoming entitled to a share in consequence of the death or bankruptcy of a member or otherwise by operation of law (upon supplying to the Company such evidence as the Directors may reasonably require to show his title to the share) shall be entitled to the same dividends and other advantages as those to which he would be entitled if he were the registered holder of the share except that he shall not be entitled in respect thereof (except with the authority of the Directors) to exercise any right conferred by membership in relation to shareholders’ meetings until he shall have been registered as a member in respect of the share.

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Untraced Shareholders

47	Untraced shareholders
	The Company shall be entitled to sell at the best price reasonably obtainable at the time of sale the shares of a member or the shares to which a person is entitled by virtue of transmission on death or bankruptcy or otherwise by operation of law if and provided that:
47.1	during the period of six years prior to the date of the publication of the advertisements referred to in Article 47.2 below (or, if published on different dates, the first thereof) no communication has been received by the Company from the member or the person entitled by transmission and no cheque or warrant sent by the Company through the post in a pre-paid letter addressed to the member or to the person entitled by transmission to the shares at his address on the Register or the last known address given by the member or the person entitled by transmission to which cheques and warrants are to be sent has been cashed and at least three dividends in respect of the shares in question have become payable and no dividend in respect of those shares has been claimed;
47.2	the Company shall on expiry of the said period of six years have inserted advertisements in both a leading national daily newspaper and in a newspaper circulating in the area in which the address referred to in Article 47.1 above is located giving notice of its intention to sell the said shares; and
47.3	during the said period of six years and the period of three months following the publication of the said advertisements the Company shall have received no communication from such member or person.
48	Executor and proceeds
	To give effect to any such sale the Company may appoint any person to transfer, as transferor, the said shares and such transfer shall be as effective as if it had been carried out by the registered holder of or person entitled by transmission to such shares and the title of the transferee shall not be affected by any irregularity or invalidity in the proceedings relating thereto. The net proceeds of sale shall belong to the Company which shall be obliged to account to the former member or other person previously entitled as aforesaid for an amount equal to such proceeds and shall enter the name of such former member or other person in the books of the Company as a creditor for such amount which shall be a permanent debt of the Company. No trust shall be created in respect of the debt, no interest shall be payable in respect of the same and the Company shall not be required to account for any money earned on the net proceeds, which may be employed in the business of the Company or invested in such investments (other than shares of the Company or its holding company if any) as the Directors may from time to time think fit.

General Meetings

49	Annual General Meetings
	An Annual General Meeting shall be held in each period of 6 months beginning with the day following the Company’s accounting reference date, at such place, date and time as may be determined by the Directors.

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50	Convening of General Meetings
	The Directors may whenever they think fit, and shall on requisition in accordance with the Statutes, proceed to convene a General Meeting.

Notice of General Meetings

51	Notice of General Meetings
51.1	An Annual General Meeting shall be called by notice of at least 21 days.
51.2	Any other General Meeting shall be called by notice of at least 14 days.
51.3	The period of notice shall in either case be exclusive of the day on which it is served or deemed to be served and of the day on which the meeting is to be held.
51.4	Notice shall be given to all members other than such as are not under the provisions of these Articles entitled to receive such notices from the Company. The Company may determine that only those persons entered on the Register at the close of business on a day determined by the Company, such day being no more than 21 days before the day that notice of the meeting is sent, shall be entitled to receive such a notice.
51.5	A General Meeting, notwithstanding that it has been called by a shorter notice than that specified above, shall be deemed to have been duly called if it is so agreed:

51.5.1	in the case of an Annual General Meeting by all the members entitled to attend and vote thereat; and
51.5.2	in the case of any other General Meeting by a majority in number of the members having a right to attend and vote thereat, being a majority together holding not less than 95 per cent in nominal value of the shares giving that right.

52	Contents of notice of General Meetings
52.1	Every notice calling a General Meeting shall specify the place, date and time of the meeting.
52.2	There shall appear with reasonable prominence in every such notice a statement that:

52.2.1	a member is entitled to appoint another person as his proxy to exercise all or any of his rights to attend and to speak and vote; and
52.2.2	that a proxy need not be a member of the Company.

52.3	In the case of an Annual General Meeting, the notice shall also specify the meeting as such.
52.4	The notice shall specify the general nature of the business to be transacted at the meeting and if any resolution is to be proposed as a Special Resolution, the notice shall contain a statement to that effect.
52.5	For the purposes of determining which persons are entitled to attend or vote at a meeting and how many votes such persons may cast, the Company may specify in the notice of the meeting a time, not more than 48 hours before the time fixed for the meeting, by which a

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person must be entered on the Register in order to have the right to attend or vote at the meeting.

Overflow of General Meetings

53	The Board may, notwithstanding that the notice of any General Meeting may specify the place of the meeting (the “Principal Place”), at which the chairman of the meeting shall preside, make arrangements for simultaneous attendance and participation at other places by members and proxies entitled to attend the General Meeting but unable to do so at the Principal Place.
54	Such arrangements for simultaneous attendance at the meeting may include arrangements regarding the level of attendance as aforesaid at the other places provided that they shall operate so that any members and proxies excluded from attendance at the Principal Place are able to attend at one or more of the other places. For the purpose of all other provisions of these Articles any such meeting shall be treated as being held and taking place at the Principal Place.
55	The Board may, for the purpose of facilitating the organisation and administration of any General Meeting to which such arrangements apply, from time to time make arrangements, whether involving the issue of tickets (on a basis intended to afford all members and proxies entitled to attend the meeting an equal opportunity of being admitted to the Principal Place) or the imposition of some random means of selection or otherwise as it shall in its absolute discretion consider to be appropriate, and may from time to time vary any such arrangements or make new arrangements in their place and the entitlement of any member or proxy to attend a General Meeting at the Principal Place shall be subject to the arrangements as may be for the time being in force whether stated in the notice of meeting to apply to that meeting or notified to the members concerned subsequent to the provision of the notice of the meeting.

Proceedings at General Meetings

56	Chairman
	The Chairman of the Directors, failing whom a Deputy Chairman, failing whom any Director present and willing to act and, if more than one, chosen by the Directors present at the meetings shall preside as chairman at a General Meeting. If no Director is present within five minutes after the time appointed for holding the meeting and willing to act as chairman, the Directors present shall choose one of their number or, if no Director be present or if all the Directors present decline to take the chair, a member may be elected to be the chairman by a resolution of the Company passed at the meeting.
57	Quorum
	No business other than the appointment of a chairman shall be transacted at any General Meeting unless a quorum is present at the time when the meeting proceeds to business.

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	Three members present in person or by proxy and entitled to vote shall be a quorum for all purposes.
58	Lack of quorum
	If within five minutes from the time appointed for a General Meeting (or such longer interval as the chairman of the meeting may think fit to allow) a quorum is not present, or if during the meeting a quorum ceases to be present, the meeting, if convened on the requisition of members, shall be dissolved. In any other case it shall stand adjourned to such other day and such time and place as may have been specified for the purpose in the notice convening the meeting or (if not so specified) as the chairman of the meeting may determine.
59	Adjournment
	The chairman of any General Meeting at which a quorum is present may with the consent of the meeting (and shall if so directed by the meeting) adjourn the meeting from time to time (or sine die) and from place to place, but no business shall be transacted at any adjourned meeting except business which might lawfully have been transacted at the meeting from which the adjournment took place. Where a meeting is adjourned sine die, the time and place for the adjourned meeting shall be fixed by the Directors. When a meeting is adjourned for 30 days or more or sine die, not less than seven days’ notice of the adjourned meeting shall be given in like manner as in the case of the original meeting.
60	Notice of adjourned meeting
	Save as hereinbefore expressly provided, it shall not be necessary to give any notice of an adjournment or of the business to be transacted at an adjourned meeting.
61	Amendments to resolutions
	If an amendment shall be proposed to any resolution under consideration but shall in good faith be ruled out of order by the chairman of the meeting the proceedings on the substantive resolution shall not be invalidated by any error in such ruling. In the case of a resolution duly proposed as a Special Resolution, no amendment thereto (other than a mere clerical amendment to correct a patent error) may in any event be considered or voted upon.
62	Polls
	At any General Meeting a resolution put to the vote of the meeting shall be decided on a show of hands unless a poll is (before, or on the declaration of the result of, the show of hands) demanded by:
62.1	the chairman of the meeting;
62.2	not less than five members present in person or by proxy and entitled to vote;
62.3	a member or members present in person or by proxy and representing not less than one-tenth of the total voting rights of all the members having the right to vote at the meeting; or

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62.4	a member or members present in person or by proxy and holding shares in the Company conferring a right to vote at the meeting being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all the shares conferring that right.
63	Demand for poll
	A demand for a poll may, before the poll is taken, be withdrawn only with the approval of the chairman of the meeting. A demand so withdrawn shall not be taken to have invalidated the result of a show of hands declared before the demand was made. Unless a poll is taken a declaration by the chairman that a resolution has been carried, or carried unanimously, or by a particular majority, or lost, and an entry to that effect in the minute book, shall be conclusive evidence of that fact without proof of the number or proportion of the votes recorded for or against such resolution. If a poll is demanded, it shall be taken in such manner (including by use of ballot, voting papers, tickets, electronic means, or any combination thereof) as the chairman of the meeting may direct, and the result of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded. The chairman of the meeting may (and if so directed by the meeting shall) appoint scrutineers (who need not be members) and may adjourn the meeting to some place and time fixed by him for the purpose of declaring the result of the poll. The result of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded.
64	Voting on a poll
	On a poll votes may be given either personally or by proxy and a person entitled to more than one vote need not use all his votes or cast all the votes he uses in the same way.
65	Chairman’s casting vote
	In the case of an equality of votes, whether on a show of hands or on a poll, the chairman of the meeting at which the show of hands takes place or at which the poll is demanded shall be entitled to a casting vote in addition to any other vote he may have.
66	Timing of poll
	A poll demanded on the choice of a chairman or on a question of adjournment shall be taken forthwith. A poll demanded on any other question shall be taken either immediately or at such subsequent time (not being more than 30 days from the date of the meeting) and place as the chairman may direct. No notice need be given of a poll not taken immediately. The demand for a poll shall not prevent the continuance of the meeting for the transaction of any business other than the question on which the poll has been demanded.

Votes of Members

67	Votes attaching to shares
	Subject to Articles 52.5 and 71 and to any special rights or restrictions as to voting attached by or in accordance with these Articles to any class of shares:

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67.1	on a show of hands every member who is present in person and every proxy present who has been duly appointed by a member entitled to vote on the resolution shall have one vote; and
67.2	on a poll every member who is present in person or by proxy shall have one vote for every share of which he is the holder.
68	Votes of joint holders
	In the case of joint holders of a share the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders and for this purpose seniority shall be determined by the order in which the names stand in the Register in respect of the share.
69	Voting by guardian
	Where in England or elsewhere a guardian, receiver or other person (by whatever name called) has been appointed by any Court claiming jurisdiction in that behalf to exercise powers with respect to the property or affairs of any member on the ground (however formulated) of mental disorder, the Directors may in their absolute discretion, upon or subject to production of such evidence of the appointment as the Directors may require, permit such guardian, receiver or other person on behalf of such member to vote in person or by proxy at any shareholders’ meeting or to exercise any other right conferred by membership in relation to shareholders’ meetings.
70	Restrictions on voting if holding unpaid shares
	No member shall, unless the Directors otherwise determine, be entitled in respect of any share held by him to vote either personally or by proxy at a shareholders’ meeting or to exercise any other right conferred by membership in relation to shareholders’ meetings if any call or other sum presently payable by him to the Company in respect of that share remains unpaid.
71	Restrictions on voting in particular circumstances
71.1	If any member, or any other person appearing to be interested in shares (within the meaning of Part 22 of the Companies Act 2006) held by such member, has been duly served with a notice under Section 793 of the Companies Act 2006 and is in default for a period of 14 days from the date of service in supplying to the Company the information thereby required, then (unless the Directors otherwise determine) in respect of:

71.1.1

the shares comprising the shareholding account in the Register which comprises or includes the shares in relation to which the default occurred (all or the relevant number as appropriate of such shares being the “default shares”, which expression shall include any further shares which are issued in respect of such shares after the date of the notice under Section 793 of the Companies Act 2006); and

71.1.2

any other shares held by the member,

the member shall (for so long as the default continues) not, nor shall any transferee to whom any of such shares are transferred (other than pursuant to an approved transfer or

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	pursuant to paragraph 71.2.2 below) be entitled to attend or vote either personally or by proxy at a shareholders’ meeting or to exercise any other right conferred by membership in relation to shareholders’ meetings.
71.2	Where the default shares represent at least 0.25 per cent of the issued shares of the class in question, the Directors may in their absolute discretion by notice (a “direction notice”) to such member direct that:

71.2.1	any dividend or part thereof or other money which would otherwise be payable in respect of the default shares shall be retained by the Company without any liability to pay interest thereon when such dividend or other money is finally paid to the member and the member shall not be entitled to elect to receive shares in lieu of dividend; and/or
71.2.2	no transfer of any of the shares held by such member shall be registered unless the transfer is an approved transfer or:

(i)	the member is not himself in default as regards supplying the information required; and
(ii)	the transfer is of part only of the member’s holding and, when presented for registration, is accompanied by a certificate by the member in a form satisfactory to the Directors to the effect that after due and careful enquiry the member is satisfied that none of the shares the subject of the transfer are default shares,

	provided that, in the case of shares in uncertificated form, the Directors may only exercise their discretion not to register a transfer if permitted to do so by the Regulations.
	Any direction notice may treat shares of a member in certificated and uncertificated form as separate holdings and either apply only to the former or to the latter or make different provision for the former and the latter.
	Upon the giving of a direction notice its terms shall apply accordingly.
71.3	The Company shall send to each other person appearing to be interested in the shares which are the subject of any direction notice a copy of the notice, but the failure or omission by the Company to do so shall not invalidate such notice.
71.4

71.4.1

Save as herein provided any direction notice shall have effect in accordance with its terms for so long as the default in respect of which the direction notice was issued continues and shall cease to have effect thereafter upon the Directors so determining (such determination to be made within a period of one week of the default being duly remedied, with written notice thereof being given forthwith to the member).

71.4.2

Any direction notice shall cease to have effect in relation to any shares which are transferred by such member by means of an approved transfer or in accordance with paragraph 71.2.2 above.

71.5 For the purposes of this Article:

71.5.1 a person shall be treated as appearing to be interested in any shares if the member holding such shares has been served with a notice under the said Section

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	793 and either (a) the member has named such person as being so interested or (b) (after taking into account the response of the member to the said notice and any other relevant information) the Company knows or has reasonable cause to believe that the person in question is or may be interested in the shares; and
71.5.2	a transfer of shares is an approved transfer if:

(i)

it is a transfer of shares to an offeror by way or in pursuance of acceptance of a takeover offer (as defined in Section 974 of the Companies Act 2006); or

(ii)

the Directors are satisfied that the transfer is made pursuant to a bona fide sale of the whole of the beneficial ownership of the shares to a party unconnected with the member or with any person appearing to be interested in such shares including any such sale made through a recognised investment exchange or through a stock exchange outside the United Kingdom on which the Company’s shares are normally traded. For the purposes of this sub-paragraph any associate (as that term is defined in Section 435 of the Insolvency Act 1986) shall be included amongst the persons who are connected with the member or any person appearing to be interested in such shares.

71.6	The provisions of this Article are in addition and without prejudice to the provisions of the Companies Acts.
72	Validity and result of vote
	No objection shall be raised as to the qualification of any voter or the admissibility of any vote except at the meeting or adjourned meeting at which the vote is tendered. Every vote not disallowed at such meeting shall be valid for all purposes. Any such objection shall be referred to the chairman of the meeting, whose decision shall be final and conclusive.

Proxies

73	Appointment of proxies
73.1	A member is entitled to appoint a proxy or (subject to Article 73A) proxies to exercise all or any of his rights to attend and to speak and vote at a meeting of the Company.
73.2	A proxy need not be a member of the Company.
73A	Multiple proxies
	A member may appoint more than one proxy in relation to a meeting provided that each proxy is appointed to exercise the rights attached to a different share or shares held by him.
74	Form of proxy
	The appointment of a proxy must be in writing in any usual or common form or in any other form which the Directors may approve and:

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74.1	in the case of an individual must either be signed by the appointor or his attorney or authenticated in accordance with Article 154; and
74.2	in the case of a corporation must be either given under its common seal or be signed on its behalf by an attorney or a duly authorised officer of the corporation or authenticated in accordance with Article 154.
	Any signature on or authentication of such appointment need not be witnessed. Where an appointment of a proxy is signed or authenticated in accordance with Article 154 on behalf of the appointor by an attorney, the power of attorney or a copy thereof certified notarially or in some other way approved by the Directors must (failing previous registration with the Company) be submitted to the Company, failing which the appointment may be treated as invalid.
75	Deposit of form of proxy
75.1	The appointment of a proxy (together with any supporting documentation required under Article 74) must be received at the address or one of the addresses (if any) specified for that purpose in, or by way of note to, or in any document accompanying, the notice convening the meeting (or if no address is so specified, at the Transfer Office):

75.1.1	in the case of a meeting or adjourned meeting, not less than 48 hours before the commencement of the meeting or adjourned meeting to which it relates;
75.1.2	in the case of a poll taken following the conclusion of a meeting or adjourned meeting, but not more than 48 hours after the poll was demanded, not less than 48 hours before the commencement of the meeting or adjourned meeting at which the poll was demanded; and
75.1.3	in the case of a poll taken more than 48 hours after it was demanded, not less than 24 hours before the time appointed for the taking of the poll;

	and in default shall not be treated as valid.
75.2	The Directors may at their discretion determine that, in calculating the periods mentioned in Article 75.1, no account shall be taken of any part of any day that is not a working day (within the meaning of Section 1173 of the Companies Act 2006).
75.3	Without limiting the foregoing, in relation to any shares in uncertificated form the Directors may permit a proxy to be appointed by electronic means and/or by means of a website in the form of an Uncertificated Proxy Instruction (that is, a properly authenticated dematerialised instruction, and/or other instruction or notification, sent by means of a relevant system to such participant in that system acting on behalf of the Company as the Directors may prescribe, in such form and subject to such terms and conditions as may from time to time be prescribed by the Directors (subject always to the facilities and requirements of the relevant system)); and may permit any supplement to, or amendment or revocation of, any such Uncertificated Proxy Instruction to be made by a further Uncertificated Proxy Instruction. The Directors may in addition prescribe the method of determining the time at which any such instruction or notification is to be treated as received by the Company. The Directors may treat any such instruction or notification purporting or expressed to be sent on behalf of a holder of a share as sufficient evidence of the authority of the person sending the instruction to send it on behalf of that holder.

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75.4	The appointment of a proxy shall, unless the contrary is stated thereon, be as valid for any adjournment of a meeting as it is for the meeting to which it relates. An appointment relating to more than one meeting (including any adjournment of any such meeting) having once been delivered in accordance with this Article 75 for the purposes of any such meeting does not need to be delivered again for the purposes of any subsequent meeting to which it relates.
76	Differing proxy appointments
	When two or more valid but differing proxy appointments are delivered in respect of the same share for use at the same meeting, the one which is last delivered (regardless of its date or the date of its execution (if relevant)) shall be treated as replacing and revoking the others as regards that share and if the Company is unable to determine which was last delivered none of them shall be treated as valid in respect of that share.
77	Rights of proxy
77.1	A proxy shall have the right to exercise all or any of the rights of his appointor, or (where more than one proxy is appointed) all or any of the rights attached to the shares in respect of which he is appointed the proxy to attend, and to speak and vote, at a meeting of the Company.
77.2	Unless his appointment provides otherwise, a proxy may vote or abstain at his discretion on any matter coming before the meeting on which proxies are entitled to vote.
78	Termination of proxy’s authority
78.1	Neither the death or insanity of a member who has appointed a proxy, nor the revocation or termination by a member of the appointment of a proxy (or of the authority under which the appointment was made), shall invalidate the proxy or the exercise of any of the rights of the proxy thereunder, unless notice of such death, insanity, revocation or termination shall have been received by the Company in accordance with Article 78.2.
78.2	Any such notice of death, insanity, revocation or termination must be received at the address or one of the addresses (if any) specified for receipt of proxies in, or by way of note to, or in any document accompanying, the notice convening the meeting to which the appointment of the proxy relates (or if no address is so specified, at the Transfer Office):

78.2.1	in the case of a meeting or adjourned meeting, not less than 24 hours before the commencement of the meeting or adjourned meeting to which the proxy appointment relates;
78.2.2	in the case of a poll taken following the conclusion of a meeting or adjourned meeting, but not more than 48 hours after it was demanded, not less than 24 hours before the commencement of the meeting or adjourned meeting at which the poll was demanded; or
78.2.3	in the case of a poll taken more than 48 hours after it was demanded, not less than 24 hours before the time appointed for the taking of the poll.

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Corporations Acting by Representatives

79 Subject to the Statutes, any corporation which is a member of the Company may by resolution of its directors or other governing body authorise a person or persons to act as its representative or representatives at any shareholders’ meeting.

Directors

80	Number of Directors
	Subject as hereinafter provided the Directors shall not be less than five nor more than 18 in number. The Company may by Ordinary Resolution from time to time vary the minimum number and/or maximum number of Directors.
81	Share qualification
	A Director shall not be required to hold any shares of the Company by way of qualification. A Director who is not a member of the Company shall nevertheless be entitled to receive notice of, attend and speak at shareholders’ meetings.
82	Directors’ fees
	Each of the Directors, other than those who hold executive office or are employees of the Company or any subsidiary, shall be paid a fee (which shall accrue from day to day) at such rate as may from time to time be determined by the Directors, provided that the aggregate of all such fees shall not in respect of any year exceed £1,000,000 or such other sum as shall be determined by Ordinary Resolution of the Company.
83	Other remuneration of Directors
	Any Director who holds any executive office (including for this purpose the office of Chairman, Deputy Chairman or Vice Chairman whether or not such office is held in an executive capacity), or who serves on any committee of the Directors, or who otherwise performs services which in the opinion of the Directors are outside the scope of the ordinary duties of a Director, may be paid such extra remuneration by way of salary, commission or otherwise or may receive such other benefits as the Directors may determine.
84	Directors’ expenses
	The Directors may repay to any Director all such reasonable expenses as he may incur in attending and returning from meetings of the Directors or of any committee of the Directors or shareholders’ meetings or otherwise in connection with the business of the Company.

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85	Directors’ pensions and other benefits
	The Directors shall have power to pay and agree to pay gratuities, pensions or other retirement, superannuation, death or disability benefits to (or to any person in respect of) any Director or ex-Director of the Company or any of its subsidiaries and for the purpose of providing any such gratuities, pensions or other benefits to contribute to any scheme or fund or to pay premiums.
86	Article deleted by Special Resolution passed on 30 May 2007 with effect from 1 October 2008
87	Appointment of executive Directors
87.1	The Directors may from time to time appoint one or more of their body to be the holder of any executive office (including, where considered appropriate, the office of Chairman, Deputy Chairman, Vice Chairman or Group Chief Executive) on such terms and for such period as they may (subject to the provisions of the Statutes) determine and, without prejudice to the terms of any contract entered into in any particular case, may at any time revoke or vary the terms of any such appointment.
87.2	The appointment of any Director to the office of Chairman, Deputy Chairman, Vice Chairman or Group Chief Executive or Managing or Joint Managing or Deputy or Assistant Managing Director shall automatically determine if he ceases to be a Director but without prejudice to any claim for damages for breach of any contract of service between him and the Company.
87.3	The appointment of any Director to any other executive office shall not automatically determine if he ceases from any cause to be a Director, unless the contract or resolution under which he holds office shall expressly state otherwise, in which event such determination shall be without prejudice to any claim for damages for breach of any contract of service between him and the Company.
88	Powers of executive Directors
	The Directors may entrust to and confer upon any Director holding any executive office any of the powers exercisable by them as Directors upon such terms and conditions and with such restrictions as they think fit, and either collaterally with or to the exclusion of their own powers, and may from time to time revoke, withdraw, alter or vary all or any of such powers.

Appointment and Retirement of Directors

89	Election or appointment of additional director
	The Company may by Ordinary Resolution elect any person to be a Director either to fill a casual vacancy or as an additional Director. Without prejudice thereto the Directors shall have power at any time so to do, but so that the total number of Directors shall not thereby exceed the maximum number (if any) fixed by or in accordance with these Articles. Any

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	person so appointed by the Directors shall retire at the next Annual General Meeting and shall then be eligible for election.
90	Vacation of office
	The office of a Director shall be vacated in any of the following events, namely:
90.1	if he shall become prohibited by law from acting as a Director;
90.2	if he shall resign by writing under his hand left at the Office or if he shall in writing offer to resign and the Directors shall resolve to accept such offer;
90.3	if he shall have a bankruptcy order made against him or shall compound with his creditors generally or shall apply to the Court for an interim order under Section 253 of the Insolvency Act 1986 in connection with a voluntary arrangement under that act;
90.4	if in England or elsewhere an order shall be made by any Court claiming jurisdiction in that behalf on the ground (however formulated) of mental disorder for his detention or for the appointment of a guardian or for the appointment of a receiver or other person (by whatever name called) to exercise powers with respect to his property or affairs;
90.5	if he shall be absent from meetings of the Directors for six months without leave and the Directors shall resolve that his office be vacated; or
90.6	if a notice in writing is served upon him, signed by at least 75 per cent of his co-Directors for the time being, to the effect that his office as Director shall on receipt (or deemed receipt) of such notice ipso facto be vacated, but so that if he holds an appointment to an executive office which thereby automatically determines such removal shall be deemed an act of the Company and shall have effect without prejudice to any claim for damages for breach of any contract of service between him and the Company.
91	Retirement by rotation at Annual General Meetings
91.1	Each Director shall retire at the Annual General Meeting held in the third calendar year following the year in which he was elected or last re-elected but, unless he falls within Article 91.2 below, he shall be eligible for re-election.
91.2	A Director shall also retire at any Annual General Meeting if he has agreed to do so (whether in accordance with the terms of his appointment or otherwise) and, unless the Directors have agreed otherwise, he shall not be eligible for re-election.
92	Re-election of retiring Director
	The Company at the meeting at which a Director retires under any provision of these Articles may by Ordinary Resolution fill the office being vacated by electing thereto the retiring Director (if eligible for re-election) or some other person eligible for election. In the absence of such a resolution the retiring Director shall nevertheless be deemed to have been re-elected except in any of the following cases:
92.1	where at such meeting it is expressly resolved not to fill such office or a resolution for the re-election of such Director is put to the meeting and lost;

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92.2	where such Director is ineligible for re-election or has given notice in writing to the Company that he is unwilling to be re-elected; or
92.3	where a resolution to elect such Director is void by reason of contravention of the next following Article.
	The retirement shall not have effect until the conclusion of the meeting except where a resolution is passed to elect some other person in the place of the retiring Director or a resolution for his re-election is put to the meeting and lost and accordingly a retiring Director who is re-elected or deemed to have been re-elected will continue in office without a break.
93	Election of two or more Directors
	A resolution for the election of two or more persons as Directors by a single resolution shall not be moved at any General Meeting unless a resolution that it shall be so moved has first been agreed to by the meeting without any vote being given against it. Any resolution moved in contravention of this provision shall be void.
94	Nomination of Directors for election
	No person other than a Director retiring at the meeting shall, unless recommended by the Directors for election, be eligible for election as a Director at any General Meeting unless not less than seven nor more than 42 days (inclusive of the date on which the notice is given) before the date appointed for the meeting there shall have been lodged at the Office:
94.1	notice in writing signed or authenticated in accordance with Article 154 by some member (other than the person to be proposed) duly qualified to attend and vote at the meeting for which such notice is given of his intention to propose such person for election; and
94.2	notice in writing signed or authenticated in accordance with Article 154 by the person to be proposed of his willingness to be elected.
95	Power to remove a Director
	The Company may, in accordance with and subject to the provisions of the Statutes, by Ordinary Resolution of which special notice has been given remove any Director from office (notwithstanding any provision of these Articles or of any agreement between the Company and such Director, but without prejudice to any claim he may have for damages for breach of any such agreement) and elect another person in place of a Director so removed from office.

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96	Article deleted by Special Resolution passed on 30 May 2008
97	Article deleted by Special Resolution passed on 1 June 2007

Alternate Directors

98	Any Director may at any time by writing under his hand and deposited at the Office, or delivered at a meeting of the Directors, appoint any person (including another Director) to be his alternate Director and may in like manner at any time terminate such appointment. Such appointment, unless previously approved by the Directors or unless the appointee is another Director, shall have effect only upon and subject to being so approved.
99	The appointment of an alternate Director shall determine on the happening of any event which if he were a Director would cause him to vacate such office or if his appointor ceases to be a Director, otherwise than by retirement at a General Meeting at which he is re-elected.
100	An alternate Director shall be entitled to receive notices of meetings of the Directors and shall be entitled to attend and vote as a Director at any such meeting at which the Director appointing him is not personally present and generally at such meeting to perform all functions of his appointor as a Director and for the purposes of the proceedings at such meeting the provisions of these Articles shall apply as if he (instead of his appointor) were a Director. If he shall be himself a Director or shall attend any such meeting as an alternate for more than one Director, his voting rights shall be cumulative but he shall not be counted more than once for the purposes of the quorum. If his appointor is for the time being absent from the United Kingdom or temporarily unable to act through ill health or disability his signature to any resolution in writing of the Directors shall be as effective as the signature of his appointor. To such extent as the Directors may from time to time determine in relation to any committees of the Directors the foregoing provisions of this Article shall also apply mutatis mutandis to any meeting of any such committee of which his appointor is a member. An alternate Director shall not (save as aforesaid) have power to act as a Director, nor shall he be deemed to be the agent of his appointor.
101	An alternate Director shall be entitled to contract and be interested in and benefit from contracts or arrangements or transactions and to be repaid expenses and to be indemnified to the same extent mutatis mutandis as if he were a Director but he shall not be entitled to receive from the Company in respect of his appointment as alternate Director any remuneration except only such part (if any) of the remuneration otherwise payable to his appointor as such appointor may by notice in writing to the Company from time to time direct.

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Meetings and Proceedings of Directors

102	Governing of meetings of Directors
102.1	Subject to the provisions of these Articles the Directors may meet together for the despatch of business, adjourn and otherwise regulate their proceedings as they think fit. At any time any Director may, and the Secretary at the request of a Director shall, call a meeting of the Directors. Any Director may waive notice of any meeting and any such waiver may be retroactive.
102.2	A notice of a meeting of directors convened in accordance with Article 102.1, or a copy of the text of any written resolution proposed to be passed in accordance with Article 110, (each a “Communication”) shall be provided to each Director personally, by word of mouth, by notice in writing or by electronic means (in the case of a written notice or a notice sent by electronic means, sent to him at his last known address or such other address as may be notified to the Secretary from time to time), and each Director shall, on appointment, be taken to have agreed to the giving of notices in any such manner. Any such Communication may be delivered by hand or sent by courier, fax, electronic mail or pre-paid first class post. If sent by fax or electronic mail such Communication shall conclusively be deemed to have been given or served at the time of despatch. If sent by post or courier such Communication shall conclusively be deemed to have been received 24 hours from the time of posting or despatch, in the case of inland mail and couriers in the United Kingdom, or 48 hours from the time of posting or despatch in the case of international mail and couriers.
102.3	A Communication shall be deemed duly served under Article 102.2 if sent to the address, fax number or electronic mail address last provided by each Director to the Secretary. The non-receipt by any Director of any Communication served in accordance with the provisions of this Article 102 shall not invalidate any meeting of directors, or any written resolution signed in accordance with Article 110, to which the Communication relates if such meeting or resolution is otherwise held or signed in accordance with the provisions of these Articles.
103	Quorum
	The quorum necessary for the transaction of business of the Directors may be fixed from time to time by the Directors and unless so fixed at any other number shall be three. A meeting of the Directors at which a quorum is present shall be competent to exercise all powers and discretions for the time being exercisable by the Directors. For the purposes of these Articles any Director who is able (directly or by telephonic or other communication equipment) to speak and be heard by each of the other Directors present or deemed to be present at any meeting of the Directors, shall be deemed to be present in person at such meeting and shall be entitled to vote or be counted in the quorum accordingly. Such meeting shall be deemed to take place where the largest group of those participating is assembled, or, if there is no such group, where the chairman of the meeting then is, and the word “meeting” shall be construed accordingly.

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104	Casting vote
	Questions arising at any meeting of the Directors shall be determined by a majority of votes. In the case of an equality of votes, the chairman of the meeting shall have a second or casting vote.
105	Authorisation of Directors’ interests
105.1	For the purposes of Section 175 of the Companies Act 2006, the Directors shall have the power to authorise any matter which would or might otherwise constitute or give rise to a breach of the duty of a Director under that Section to avoid a situation in which he has, or can have, a direct or indirect interest5 that conflicts, or possibly may conflict, with the interests of the Company.
105.2	Authorisation of a matter under this Article shall be effective only if:

105.2.1	the matter in question shall have been proposed in writing for consideration by the Directors, or in such other manner as the Directors may determine;
105.2.2	any requirement as to the quorum at the meeting of the Directors at which the matter is considered is met without counting the Director in question and any other interested Director (together the “Interested Directors”); and
105.2.3	the matter was agreed to without the Interested Directors voting or would have been agreed to if the votes of the Interested Directors had not been counted.

105.3	Any authorisation of a matter under this Article shall extend to any actual or potential conflict of interest which may reasonably be expected to arise out of the matter so authorised.
105.4	Any authorisation of a matter under this Article shall be subject to such conditions or limitations as the Directors may determine, whether at the time such authorisation is given or subsequently. and may be terminated by the Directors at any time. A Director shall comply with any obligations imposed on him by the Directors pursuant to any such authorisation.
105.5	A Director shall not, save as otherwise agreed by him, be accountable to the Company for any benefit which he (or a person connected with him) derives from any matter authorised by the Directors under this Article and any contract, transaction or arrangement relating thereto shall not be liable to be avoided on the grounds of any such benefit.
105A	Directors’ Permitted Interests
105A.1	Subject to compliance with Article 105A.2, a Director, notwithstanding his office, may have an interest of the following kind:

105A.1.1 where a Director (or a person connected with him) is a director or other officer of, or employed by, or otherwise interested (including by the holding of shares) in any Relevant Company;

⁵ Neither the duty in S.175(1), nor the authorisation procedure under S.175(5), applies to a conflict of interest arising in relation to a transaction or arrangement with the Company. The disclosure and approval provisions of Articles 105A and 106 are intended to deal with such conflicts.

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105A.1.2	where a Director (or a person connected with him) is a party to, or otherwise interested in, any contract, transaction or arrangement with a Relevant Company, or in which the Company is otherwise interested;
105A.1.3	where the Director (or a person connected with him) acts (or any firm of which he is a partner, employee or member acts) in a professional capacity for any Relevant Company (other than as Auditor) whether or not he or it is remunerated therefore;
105A.1.4	an interest which cannot reasonably be regarded as likely to give rise to a conflict of interest;
105A.1.5	an interest, or a transaction or arrangement giving rise to an interest, of which the Director is not aware; or
105A.1.6	any other interest authorised by Ordinary Resolution.

No authorisation under Article 105 shall be necessary in respect of any such interest.

105A.2	The Director shall declare the nature and extent of any interest permitted under Article 105A.1, and not falling with Article 105A.3, at a meeting of the Directors or in the manner set out in Section 184 or 185 of the Companies Act 2006.
105A.3	No declaration of an interest shall be required by a Director in relation to an interest:

105A.3.1	falling within paragraph 105A.1.4 or 105A.1.5;
105A.3.2	if, or to the extent that, the other Directors are already aware of such interest (and for this purpose the other Directors are treated as aware of anything of which they ought reasonably to be aware); or
105A.3.3	if, or to the extent that, it concerns the terms of his service contract (as defined in Section 227 of the Companies Act 2006) that have been or are to be considered by a meeting of the Directors, or by a committee of Directors appointed for the purpose under these Articles.

105A.4

A Director shall not, save as otherwise agreed by him, be accountable to the Company for any benefit which he (or a person connected with him) derives from any such contract, transaction or arrangement or from any such office or employment or from any interest in any Relevant Company or for such remuneration, each as referred to in Article 105A.1, and no such contract, transaction or arrangement shall be liable to be avoided on the grounds of any such interest or benefit.

105A.5

For the purposes of this Article, “Relevant Company” shall mean:

(a)	the Company;
(b)	a subsidiary undertaking of the Company;
(c)	any holding company of the Company or a subsidiary undertaking of any such holding company;
(d)	any body corporate promoted by the Company; or
(e)	any body corporate in which the Company is otherwise interested.

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106	Restrictions on quorum and voting
106.1	Save as provided in this Article, and whether or not the interest is one which is authorised pursuant to Article 105 or permitted under Article 105A, a Director shall not be entitled to vote on any resolution in respect of any contract, transaction or arrangement, or any other proposal, in which he (or a person connected with him) is interested. Any vote of a Director in respect of a matter where he is not entitled to vote shall be disregarded.
106.2	A Director shall not be counted in the quorum for a meeting of the Directors in relation to any resolution on which he is not entitled to vote.
106.3	Subject to the provisions of the Statutes, a Director shall (in the absence of some other interest than is set out below) be entitled to vote, and be counted in the quorum, in respect of any resolution concerning any contract, transaction or arrangement, or any other proposal:

106.3.1	in which he has an interest of which he is not aware;
106.3.2	in which he has an interest which cannot reasonably be regarded as likely to give rise to a conflict of interest;
106.3.3	in which he has an interest only by virtue of interests in shares, debentures or other securities of the Company, or by reason of any other interest in or through the Company;
106.3.4	which involves the giving of any security, guarantee or indemnity to the Director or any other person in respect of (i) money lent or obligations incurred by him or by any other person at the request of or for the benefit of the Company or any of its subsidiary undertakings; or (ii) a debt or other obligation of the Company or any of its subsidiary undertakings for which he himself has assumed responsibility in whole or in part under a guarantee or indemnity or by the giving of security;
106.3.5	concerning an offer of shares or debentures or other securities of or by the Company or any of its subsidiary undertakings (i) in which offer he is or may be entitled to participate as a holder of securities; or (ii) in the underwriting or sub-underwriting of which he is to participate;
106.3.6	concerning any other body corporate in which he is interested, directly or indirectly and whether as an officer, shareholder, creditor, employee or otherwise, provided that he (together with persons connected with him) is not the holder of, or beneficially interested in, one per cent or more of the issued equity share capital of any class of such body corporate or of the voting rights available to members of the relevant body corporate;
106.3.7	relating to an arrangement for the benefit of the employees or former employees of the Company or any of its subsidiary undertakings which does not award him any privilege or benefit not generally awarded to the employees or former employees to whom such arrangement relates;
106.3.8	concerning the purchase or maintenance by the Company of insurance for any liability for the benefit of Directors or for the benefit of persons who include Directors;
106.3.9	concerning the giving of indemnities in favour of Directors;

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106.3.10	concerning the funding of expenditure by any Director or Directors on (i) defending criminal, civil or regulatory proceedings or actions against him or them; (ii) in connection with an application to the court for relief; or (iii) defending him or them in any regulatory investigations;
106.3.11	concerning the doing of anything to enable any Director or Directors to avoid incurring expenditure as described in paragraph 106.3.10; and
106.3.12	in respect of which his interest, or the interest of Directors generally, has been authorised by Ordinary Resolution.

106.4	Where proposals are under consideration concerning the appointment (including fixing or varying the terms of appointment) of two or more Directors to offices or employments with the Company (or any body corporate in which the Company is interested), the proposals may be divided and considered in relation to each Director separately. In such case, each of the Directors concerned (if not debarred from voting under paragraph 106.3.6) shall be entitled to vote, and be counted in the quorum, in respect of each resolution except that concerning his own appointment or the fixing or variation of the terms thereof.
106.5	If a question arises at any time as to whether any interest of a Director prevents him from voting, or being counted in the quorum, under this Article, and such question is not resolved by his voluntarily agreeing to abstain from voting, such question shall be referred to the chairman of the meeting and his ruling in relation to any Director other than himself shall be final and conclusive, except in a case where the nature or extent of the interest of such Director has not been fairly disclosed. If any such question shall arise in respect of the chairman of the meeting, the question shall be decided by resolution of the Directors and the resolution shall be conclusive except in a case where the nature or extent of the interest of the chairman of the meeting (so far as it is known to him) has not been fairly disclosed to the Directors.
106A	Confidential information
106A.1	Subject to Article 106A.2, if a Director, otherwise than by virtue of his position as Director, receives information in respect of which he owes a duty of confidentiality to a person other than the Company, he shall not be required:

106A.1.1	to disclose such information to the Company or to the Directors, or to any Director, officer or employee of the Company; or
106A.1.2	otherwise use or apply such confidential information for the purpose of or in connection with the performance of his duties as a Director.

106A.2	Where such duty of confidentiality arises out of a situation in which the Director has, or can have, a direct or indirect interest that conflicts, or possibly may conflict, with the interests of the Company, Article 106A.1 shall apply only if the conflict arises out of a matter which has been authorised under Article 105 above or falls within Article 105A above.
106A.3	This Article is without prejudice to any equitable principle or rule of law which may excuse or release the Director from disclosing information, in circumstances where disclosure may otherwise be required under this Article.

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107	Directors’ interests — general
107.1	For the purposes of Articles 105 to 107:

107.1.1	an interest of a person who is connected with a Director shall be treated as an interest of the Director; and
107.1.2	Section 252 of the Companies Act 2006 shall determine whether a person is connected with a Director.

107.2 Where a Director has an interest which can reasonably be regarded as likely to give rise to a conflict of interest, the Director shall if so requested by the Directors take such additional steps as may be necessary or desirable for the purpose of managing such conflict of interest, including compliance with any procedures laid down from time to time by the Directors for the purpose of managing conflicts of interest generally and/or any specific procedures approved by the Directors for the purpose of or in connection with the situation or matter in question, including without limitation:

107.2.1	absenting himself from any meetings of the Directors at which the relevant situation or matter falls to be considered; and
107.2.2	not reviewing documents or information made available to the Directors generally in relation to such situation or matter and/or arranging for such documents or information to be reviewed by a professional adviser to ascertain the extent to which it might be appropriate for him to have access to such documents or information.

107.3	The Company may by Ordinary Resolution ratify any contract, transaction or arrangement, or other proposal, not properly authorised by reason of a contravention of any provisions of Articles 105 to 107.
108	Number of Directors below minimum
	The continuing Directors may act notwithstanding any vacancies, but if and so long as the number of Directors is reduced below the minimum number fixed by or in accordance with these Articles the continuing Directors or Director may act for the purpose of filling such vacancies or of summoning General Meetings, but not for any other purpose. If there be no Directors or Director able or willing to act, then any two members may summon a General Meeting for the purpose of appointing Directors.
109	Chairman
109.1	The Directors may elect from their number a Chairman, a Deputy Chairman and/or a Vice Chairman (or two or more Deputy Chairmen and/or Vice Chairmen) and determine the period for which each is to hold office. If no Chairman, Deputy Chairman or Vice Chairman shall have been appointed or if at any meeting of the Directors no Chairman, Deputy Chairman or Vice Chairman shall be present within five minutes after the time appointed for holding the meeting, the Directors present may choose one of their number to be chairman of the meeting.
109.2	If at any time there is more than one Deputy Chairman and/or Vice Chairman the right in the absence of the Chairman to preside at a meeting of the Directors or of the Company shall be determined as between the Deputy Chairmen and/or Vice Chairmen present (if

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	more than one) by seniority in length of appointment or otherwise as resolved by the Directors.
110	Directors’ written resolutions
110.1	A Directors’ written resolution is adopted when 70 per cent of the Directors entitled to vote on such resolution have:

110.1.1	signed one or more copies of it, or
110.1.2	otherwise indicated their agreement to it in writing.

110.2	A Directors’ written resolution is not adopted if the number of Directors who have signed it is less than the quorum for Directors’ meetings.
110.3	Once a Directors’ written resolution has been adopted, it must be treated as if it had been a resolution passed at a Directors’ meeting in accordance with the Articles.
111	Appointment and constitution of committees
111.1	The Directors may delegate any of their powers or discretions (including without prejudice to the generality of the foregoing all powers and discretions whose exercise involves or may involve the payment of remuneration to or the conferring of any other benefit on all or any of the Directors) to committees. Any such committee shall, unless the Directors otherwise resolve, have power to sub-delegate to sub-committees any of the powers or discretions delegated to it. Any such committee or sub-committee shall consist of one or more Directors and (if thought fit) one or more other named person or persons to be co-opted as hereinafter provided. Insofar as any such power or discretion is delegated to a committee or sub-committee, any reference in these Articles to the exercise by the Directors of the power or discretion so delegated shall be read and construed as if it were a reference to the exercise hereof by such committee or sub-committee. Any committee or sub-committee so formed shall in the exercise of the powers so delegated conform to any regulations which may from time to time be imposed by the Directors. Any such regulations may provide for or authorise the co-option to the committee or sub-committee of persons other than Directors and may provide for members who are not Directors to have voting rights as members of the committee or sub-committee.
111.2	The meetings and proceedings of any such committee or sub-committee consisting of two or more persons shall be governed mutatis mutandis by the provisions of these Articles regulating the meetings and proceedings of the Directors, so far as the same are not superseded by any regulations made by the Directors under the last preceding Article.
111.3	All acts done by any meeting of Directors, or of any such committee or sub-committee, or by any person acting as a member of any such committee or sub-committee, shall as regards all persons dealing in good faith with the Company, notwithstanding that there was some defect in the appointment of any Director or any of the persons acting as aforesaid, or that any such persons were disqualified or had vacated office, or were not entitled to vote, be as valid as if every such person had been duly appointed and was qualified and had continued to be a Director or member of the committee or sub-committee and had been entitled to vote.

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Borrowing Powers

112	Borrowing powers
	Subject as hereinafter provided and to the provisions of the Statutes, the Directors may exercise all the powers of the Company to borrow money, and to mortgage or charge its undertaking, property (present and future) and uncalled capital or any part or parts thereof and to issue debentures and other securities, whether outright or as collateral security for any debt, liability or obligation of the Company or of any third party.
113	Borrowing restrictions
113.1	The Directors shall restrict the borrowings of the Company and exercise all voting and other rights or powers of control exercisable by the Company in relation to its subsidiary companies (if any) so as to secure (so far, as regards subsidiaries, as by such exercise they can secure) that the aggregate amount for the time being remaining outstanding of all moneys borrowed by the Group and for the time being owing to persons outside the Group shall not at any time without the previous sanction of an Ordinary Resolution of the Company exceed an amount equal to three times the share capital and consolidated reserves.
113.2	No person dealing with the Company or any of its subsidiaries shall by reason of the foregoing provision be concerned to see or enquire whether the said limit is observed and no debt incurred or security given in excess of such limit shall be invalid or ineffectual unless the lender or the recipient of the security had, at the time when the debt was incurred or security given, express notice that the said limit had been or would thereby be exceeded.

General Powers of Directors

114	General powers
	The business and affairs of the Company shall be managed by the Directors, who may exercise all such powers of the Company as are not by the Statutes or by these Articles required to be exercised by the Company in General Meeting subject nevertheless to any regulations of these Articles, to the provisions of the Statutes and to such regulations, whether or not consistent with these Articles, as may be prescribed by Special Resolution of the Company, but no regulation so made by the Company shall invalidate any prior act of the Directors which would have been valid if such regulation had not been made. The general powers given by this Article shall not be limited or restricted by any special authority or power given to the Directors by any other Article.
115	Local boards
	The Directors may establish any local boards or agencies for managing any of the affairs of the Company, either in the United Kingdom or elsewhere, and may appoint any persons to be members of such local boards, or any managers or agents, and may fix their remuneration, and may delegate to any local board, manager or agent any of the powers, authorities and discretions vested in the Directors, with power to sub-delegate, and may

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	authorise the members of any local boards, or any of them, to fill any vacancies therein, and to act notwithstanding vacancies, and any such appointment or delegation may be made upon such terms and subject to such conditions as the Directors may think fit, and the Directors may remove any person so appointed, and may annul or vary any such delegation, but no person dealing in good faith and without notice of any such annulment or variation shall be affected thereby.
116	Appointment of attorney
	The Directors may from time to time and at any time by power of attorney or otherwise appoint any company, firm or person or any fluctuating body of persons, whether nominated directly or indirectly by the Directors, to be the attorney or attorneys of the Company for such purposes and with such powers, authorities and discretions (not exceeding those vested in or exercisable by the Directors under these Articles) and for such period and subject to such conditions as they may think fit, and any such appointment may contain such provisions for the protection and convenience of persons dealing with any such attorney as the Directors may think fit, and may also authorise any such attorney to sub-delegate all or any of the powers, authorities and discretions vested in him.
117	Register of members in territories
	Subject to and to the extent permitted by the Statutes, the Company, or the Directors on behalf of the Company, may cause to be kept in any territory a branch register of members resident in such territory, and the Directors may make and vary such regulations as they may think fit respecting the keeping of any such register.
118	Signature on cheques etc.
	All cheques, promissory notes, drafts, bills of exchange, and other negotiable or transferable instruments, and all receipts for moneys paid to the Company, shall be signed, drawn, accepted, endorsed, or otherwise executed, as the case may be, in such manner as the Directors shall from time to time by resolution determine.

President

119 The Directors may from time to time elect a President of the Company and may determine the period for which he shall hold office. Such President may be either honorary or paid such remuneration as the Directors in their discretion shall think fit, and need not be a Director but shall, if not a Director, be entitled to receive notice of and attend and speak, but not to vote, at meetings of the Board of Directors only if so invited by the Directors. The President (unless he is a Director) shall not be an officer of the Company for the purposes of the Companies Acts.

Departmental, Divisional or Local Directors

120 The Directors may from time to time appoint any person to be a Departmental, Divisional or Local Director and define, limit or restrict his powers and duties and determine his

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remuneration and the designation of his office and may at any time remove any such person from such office. A Departmental, Divisional or Local Director (notwithstanding that the designation of his office may include the word “Director”) shall not by virtue of such office be or have power in any respect to act as a Director of the Company nor be entitled to receive notice of or attend or vote at meetings of the Directors nor be deemed to be a Director for any of the purposes of these presents.

Secretary

121 The Secretary shall be appointed by the Directors on such terms and for such period as they may think fit. Any Secretary so appointed may at any time be removed from office by the Directors, but without prejudice to any claim for damages for breach of any contract of service between him and the Company. If thought fit two or more persons may be appointed as Joint Secretaries. The Directors may also appoint from time to time on such terms as they may think fit one or more Deputy and/or Assistant Secretaries.

The Seal

122	The Directors shall provide for the safe custody of the Seal and any Securities Seal and neither shall be used without the authority of the Directors or of a committee authorised by the Directors in that behalf. The Securities Seal shall be used only for sealing securities issued by the Company and documents creating or evidencing securities so issued. Every instrument to which the Seal or the Securities Seal shall be affixed (other than a certificate for or evidencing shares, debentures or other securities (including options) issued by the Company) shall be signed autographically by one Director and the Secretary or Deputy or Assistant Secretary or by two Directors.
123	Where the Statutes so permit, any instrument signed by one Director and the Secretary or by two Directors and expressed to be executed by the Company shall have the same effect as if executed under the Seal, provided that no instrument shall be so signed which makes it clear on its face that it is intended to have effect as a deed without the authority of the Directors or of a committee authorised by the Directors in that behalf.
124	The Company may exercise the powers conferred by the Statutes with regard to having an official seal for use abroad and such powers shall be vested in the Directors.

Record Date

125 Notwithstanding any other provision of these Articles but subject always to the Statutes the Company or the Directors may by resolution specify any date (the “record date”) as the date at the close of business (or such other time as the Directors may determine) on which persons registered as the holders of shares or other securities shall be entitled to receipt of any dividend, distribution, interest, allotment, issue, notice, information, document or circular and such record date may be on or at any time before the date on which the same is paid or made or (in the case of any dividend, distribution, interest, allotment or issue) at

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any time after the same is recommended, resolved, declared or announced but without prejudice to the rights inter se in respect of the same of transferors and transferees of any such shares or other securities.

Authentication of Documents

126 Any Director or the Secretary or any person appointed by the Directors for the purpose shall have power to authenticate any documents affecting the constitution of the Company and any resolution passed at a shareholders’ meeting or at a meeting of the Directors or any committee, and any books, records, documents and accounts relating to the business of the Company, and to certify copies thereof or extracts therefrom as true copies or extracts; and where any books, records, documents or accounts are elsewhere than at the Office the local manager or other officer of the Company having the custody thereof shall be deemed to be a person appointed by the Directors as aforesaid. A document purporting to be a copy of any such resolution, or an extract from the minutes of any such meeting which is certified as aforesaid shall be conclusive evidence in favour of all persons dealing with the Company upon the faith thereof that such resolution has been duly passed or, as the case may be, that any minute so extracted is a true and accurate record of proceedings at a duly constituted meeting.

Reserves

127 The Directors may from time to time set aside out of the profits of the Company and carry to reserve such sums as they think proper which, at the discretion of the Directors, shall be applicable for any purpose to which the profits of the Company may properly be applied and pending such application may either be employed in the business of the Company or be invested. The Directors may divide the reserve into such special funds as they think fit and may consolidate into one fund any special funds or any parts of any special funds into which the reserve may have been divided. The Directors may also without placing the same to reserve carry forward any profits. In carrying sums to reserve and in applying the same the Directors shall comply with the provisions of the Statutes.

Dividends

128	Final dividends
	The Company may by Ordinary Resolution declare dividends but no such dividend shall exceed the amount recommended by the Directors.

129

Fixed and interim dividends

If and so far as in the opinion of the Directors the profits of the Company justify such payments, the Directors may pay the fixed dividends on any class of shares carrying a fixed dividend expressed to be payable on fixed dates on the half-yearly or other dates prescribed for the payment thereof and may also from time to time pay interim dividends on shares of any class of such amounts and on such dates and in respect of such periods

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as they think fit. Provided the Directors act in good faith they shall not incur any liability to the holders of any shares for any loss they may suffer by the lawful payment, on any other class of shares having rights ranking after or pari passu with those shares, of any such fixed or interim dividend as aforesaid.

130	Ranking of shares for dividends
	Unless and to the extent that the rights attached to any shares or the terms of issue thereof otherwise provide, all dividends shall (as regards any shares not fully paid throughout the period in respect of which the dividend is paid) be apportioned and paid pro rata according to the amounts paid on the shares during any portion or portions of the period in respect of which the dividend is paid. For the purposes of this Article no amount paid on a share in advance of calls shall be treated as paid on the share.
131	No dividend except out of profits
	No dividend shall be paid otherwise than out of profits available for distribution under the provisions of the Statutes.
132	Treatment of dividend
	Subject to the provisions of the Statutes, where any asset, business or property is bought by the Company as from a past date the profits and losses thereof as from such date may at the discretion of the Directors in whole or in part be carried to revenue account and treated for all purposes as profits or losses of the Company. Subject as aforesaid, if any shares or securities are purchased cum dividend or interest, such dividend or interest may at the discretion of the Directors be treated as revenue, and it shall not be obligatory to capitalise the same or any part thereof.
133	No interest on dividends
	No dividend or other moneys payable on or in respect of a share shall bear interest as against the Company.
134	Retention of dividends
134.1	The Directors may retain any dividend or other moneys payable on or in respect of a share on which the Company has a Iien and may apply the same in or towards satisfaction of the moneys payable to the Company in respect of that share.
134.2	The Directors may retain the dividends payable upon shares:

134.2.1	in respect of which any person is entitled to become a member under the provisions as to the transmission of shares contained in these Articles, until such person shall become a member in respect of such shares; or
134.2.2	which any person is under those provisions entitled to transfer, until such person shall transfer the same.

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135	Waiver of dividends
	The waiver in whole or in part of any dividend on any share by any document (whether or not executed as a Deed) shall be effective only if such waiver is in writing (whether or not executed as a deed), signed or authenticated in accordance with Article 154 by the shareholder (or the person entitled to the share in consequence of the death or bankruptcy of the holder or otherwise by operation of law) and delivered to the Company and if or to the extent that the same is accepted as such or acted upon by the Company.
136	Unclaimed dividends
	The payment by the Directors of any unclaimed dividend or other moneys payable on or in respect of a share into a separate account shall not constitute the Company a trustee in respect thereof, no interest shall be payable in respect of the same and the Company shall not be required to account for any money earned on the net proceeds, which may be employed in the business of the Company or invested in such investments (other than shares of the Company or its holding company if any) as the Directors may from time to time think fit. Any dividend unclaimed after a period of six years from the date of declaration of such dividend shall be forfeited and shall revert to the Company.
137	Distribution in specie
	The Company may upon the recommendation of the Directors by Ordinary Resolution direct payment of a dividend in whole or in part by the distribution of specific assets (and in particular of paid-up shares or debentures of any other company) and the Directors shall give effect to such resolution. Where any difficulty arises in regard to such distribution, the Directors may settle the same as they think expedient and in particular may issue fractional certificates, may fix the value for distribution of such specific assets or any part thereof, may determine that cash payments shall be made to any members upon the footing of the value so fixed in order to adjust the rights of members and may vest any assets in trustees.
138	Manner of payment of dividends
138.1	Any dividend or other moneys payable on or in respect of a share shall be paid to the member or to such other person as the member (or, in the case of joint holders of a share, all of them) may in writing direct. Such dividend or other moneys may be paid (i) by cheque sent by post to the payee or, where there is more than one payee, to any one of them, or (ii) by inter-bank transfer to such account as the payee or payees shall in writing direct, or (iii) (if so authorised by the holder of shares in uncertificated form) using the facilities of a relevant system (subject to the facilities and requirements of the relevant system), or (iv) by such other method of payment as the member (or, in the case of joint holders of a share, all of them) may agree to. Every such payment shall be sent at the risk of the person or persons entitled to the money represented thereby, and payment of a cheque by the banker upon whom it is drawn, and any transfer or payment within (ii), (iii) or (iv) above, shall be a good discharge to the Company.
138.2	Subject to the provisions of these Articles and to the rights attaching to any shares, any dividend or other moneys payable on or in respect of a share may be paid in such currency as the Directors may determine, using such exchange rate for currency conversions as the Directors may select.

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138.3	The Company may cease to send any cheque, warrant or order by post for any dividend on any shares which is normally paid in that manner if in respect of at least two consecutive dividends payable on those shares the cheque, warrant or order has been returned undelivered or remains uncashed but, subject to the provisions of these Articles, shall recommence sending cheques, warrants or orders in respect of the dividends payable on those shares if the holder or person entitled by transmission claims the arrears of dividend and does not instruct the Company to pay future dividends in some other way.
139	Joint holders
	If two or more persons are registered as joint holders of any share, or are entitled jointly to a share in consequence of the death or bankruptcy of the holder or otherwise by operation of law, any one of them may give effectual receipts for any dividend or other moneys payable or property distributable on or in respect of the share.
140	Record date for dividends
	Any resolution for the declaration or payment of a dividend on shares of any class, whether a resolution of the Company in General Meeting or a resolution of the Directors, may specify that the same shall be payable to the persons registered as the holders of such shares at the close of business on a particular date, notwithstanding that it may be a date prior to that on which the resolution is passed, and thereupon the dividend shall be payable to them in accordance with their respective holdings so registered, but without prejudice to the rights inter se in respect of such dividend of transferors and transferees of any such shares.

Capitalisation of Profits and Shares

141 The Directors may, with the sanction of an Ordinary Resolution of the Company, capitalise any sum standing to the credit of any of the Company’s reserve accounts (including any share premium account, capital redemption reserve or other undistributable reserve) or any sum standing to the credit of profit and loss account by appropriating such sum to the holders of Ordinary Shares on the Register at the close of business on the date of the Resolution (or such other date as may be specified therein or determined as therein provided) in proportion to their then holdings of Ordinary Shares and applying such sum on their behalf in paying up in full unissued Ordinary Shares (or, subject to any special rights previously conferred on any shares or class of shares for the time being issued, unissued shares of any other class) for allotment and distribution credited as fully paid up to and amongst them as bonus shares in the proportion aforesaid. The Directors may do all acts and things considered necessary or expedient to give effect to any such capitalisation with full power to the Directors to make such provisions as they think fit for any fractional entitlements which would arise on the basis aforesaid (including provisions whereby fractional entitlements are disregarded or the benefit thereof accrues to the Company rather than to the members concerned). The Directors may authorise any person to enter on behalf of all the members interested into an agreement with the Company providing for any such capitalisation and matters incidental thereto and any agreement made under such authority shall be effective and binding on all concerned.

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142	Scrip dividends
142.1	Subject as hereinafter provided, the Directors may offer to ordinary shareholders the right to receive, in lieu of dividend (or part thereof), an allotment of new Ordinary Shares credited as fully paid.
142.2	The Directors shall not make such an offer unless so authorised by an Ordinary Resolution passed at any General Meeting, which authority may extend to dividends declared or paid prior to the Annual General Meeting of the Company occurring thereafter, but no further provided that this Article shall, without the need for any further Ordinary Resolution, authorise the Directors to offer rights of election in respect of any dividend declared or proposed after the date of the adoption of these Articles and at or prior to the Annual General Meeting which is held in the fifth year after the Ordinary Resolution is passed.
142.3	The Directors may either offer such rights of election in respect of the next dividend (or part thereof) proposed to be paid; or may offer such rights of election in respect of that dividend and all subsequent dividends, until such time as the election is revoked; or may allow shareholders to make an election in either form.
142.4	The basis of allotment on each occasion shall be determined by the Directors so that, as nearly as may be considered convenient, the value of the Ordinary Shares to be allotted in lieu of any amount of dividend shall equal such amount. For such purpose the value of an Ordinary Share shall be either (i) the average of the closing price of an Ordinary Share on the London Stock Exchange, as derived from the Daily Official List, on each of the first five business days on which the Ordinary Shares are quoted “ex” the relevant dividend; or (ii) established in such other manner as may be determined by the Directors.
142.5	If the Directors determine to offer such right of election on any occasion they shall give notice in writing to the ordinary shareholders of such right and shall issue forms of election and shall specify the procedures to be followed in order to exercise such right provided that they need not give such notice to a shareholder who has previously made, and has not revoked, an earlier election to receive Ordinary Shares in lieu of all future dividends, but instead shall send him a reminder that he has made such an election, indicating how that election may be revoked in time for the next dividend proposed to be paid.
142.6	On each occasion the dividend (or that part of the dividend in respect of which a right of election has been accorded) shall not be payable on Ordinary Shares in respect whereof the share election has been duly exercised and has not been revoked (the “elected Ordinary Shares”), and in lieu thereof additional shares (but not any fraction of a share) shall be allotted to the holders of the elected Ordinary Shares on the basis of allotment determined as aforesaid. For such purpose the Directors shall capitalise, out of such of the sums standing to the credit of reserves (including any share premium account or capital redemption reserve) or profit and loss account as the Directors may determine, a sum equal to the aggregate nominal amount of the additional Ordinary Shares to be allotted on that occasion on such basis and shall apply the same in paying up in full the appropriate number of unissued Ordinary Shares for allotment and distribution to and amongst the holders of the elected Ordinary Shares on such basis.
142.7	The additional Ordinary Shares so allotted on any occasion shall rank pari passu in all respects with the fully-paid Ordinary Shares then in issue save only as regards participation in the relevant dividend.

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142.8	Article 141 shall apply (mutatis mutandis) to any capitalisation made pursuant to this Article.
142.9	No fraction of an Ordinary Share shall be allotted. The Directors may make such provision as they think fit for any fractional entitlements including, without limitation, provision whereby, in whole or in part, the benefit thereof accrues to the Company and/or fractional entitlements are accrued and/or retained and in either case accumulated on behalf of any ordinary shareholder.
142.10	The Directors may on any occasion determine that rights of election shall not be made available to any ordinary shareholders with registered addresses in any territory where in the absence of a registration statement or other special formalities the circulation of an offer of rights of election would or might be unlawful, and in such event the provisions aforesaid shall be read and construed subject to such determination.
142.11	In relation to any particular proposed dividend the Directors may in their absolute discretion decide (i) that shareholders shall not be entitled to make any election in respect thereof and that any election previously made shall not extend to such dividend or (ii) at any time prior to the allotment of the Ordinary Shares which would otherwise be allotted in lieu thereof, that all elections to take shares in lieu of such dividend shall be treated as not applying to that dividend, and if so the dividend shall be paid in cash as if no elections had been made in respect of it.

Minutes

143	The Directors shall cause Minutes to be made in books to be provided for the purpose:
143.1	of all appointments of officers made by the Directors;
143.2	of the names of the Directors present at each meeting of Directors and of any committee of Directors; and
143.3	of all resolutions and proceedings at all meetings of the Company and of any class of members of the Company and of the Directors and of committees of Directors.

Accounts

144	Accounting records
	Accounting records sufficient to show and explain the Company’s transactions and otherwise complying with the Statutes shall be kept at the Office, or at such other place as the Directors think fit, and shall always be open to inspection by the officers of the Company. Subject as aforesaid no member of the Company or other person shall have any right of inspecting any account or book or document of the Company except as conferred by statute or ordered by a Court of competent jurisdiction or authorised by the Directors.
145	Copies of accounts for members
145.1	Subject as provided in Article 145.2, a copy of the Company’s annual accounts and reports which are to be laid before a General Meeting of the Company (including every document

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required by law to be comprised therein or attached or annexed thereto) shall not less than 21 days before the date of the meeting be sent to every member of, and every holder of debentures of, the Company and to every other person who is entitled to receive notices of General Meetings from the Company under the provisions of the Statutes or of these Articles.

145.2

Article 145.1 shall not require a copy of these documents to be sent to any member to whom a summary financial statement is sent in accordance with the Statutes and provided further that this Article shall not require a copy of these documents to be sent to more than one of joint holders nor to any person of whose postal address the Company is not aware, but any member or holder of debentures to whom a copy of these documents has not been sent shall be entitled to receive a copy free of charge on application at the Office.

Auditors

146	Validity of Auditor’s acts
	Subject to the provisions of the Statutes, all acts done by any person acting as an Auditor shall, as regards all persons dealing in good faith with the Company, be valid, notwithstanding that there was some defect in his appointment or that he was at the time of his appointment not qualified for appointment or subsequently became disqualified.
147	Auditor’s rights to attend General Meetings
	An Auditor shall be entitled to attend any General Meeting and to receive all notices of and other communications relating to any General Meeting which any member is entitled to receive and to be heard at any General Meeting on any part of the business of the meeting which concerns him as Auditor.

Communications with Members

148	Service of notices etc.
148.1	Any notice to be given to or by any person pursuant to these Articles shall be in writing, except that notice calling a meeting of the Directors may be given as provided for in Article 102.
148.2	The Company may, subject to and in accordance with the Companies Acts and these Articles, send or supply all types of notices, documents or information to members by electronic means, including by making such notices, documents or information available on a website.
148.3	The Company Communications Provisions have effect for the purposes of any provision of the Companies Acts or these Articles that authorises or requires notices, documents or information to be sent or supplied by or to the Company.
148.4	Any notice, document or information (including a share certificate) which is sent or supplied by the Company in hard copy form or in electronic form but to be delivered other than by electronic means and/or by means of a website and which is sent by pre-paid post and properly addressed shall be deemed to have been received by the intended recipient at the

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	expiration of 24 hours (or, where second class mail is employed, 48 hours) after the time it was posted, and in proving such receipt it shall be sufficient to show that such notice, document or information was properly addressed, pre-paid and posted.
148.5	Any notice, document or information which is sent or supplied by the Company by electronic means and/or by means of a website shall be deemed to have been received by the intended recipient at 9 a.m. on the day following that on which it was transmitted, and in proving such receipt it shall be sufficient to show that such notice, document or information was properly addressed.
148.6	Any notice, document or information which is sent or supplied by the Company by means of a website shall be deemed to have been received when the material was first made available on the website or, if later, when the recipient received (or is deemed to have received) notice of the fact that the material was available on the website.
148.7	The accidental failure to send, or the non-receipt by any person entitled to, any notice of, or other document or information relating to, any meeting or other proceeding shall not invalidate the relevant meeting or proceeding.
148.8	The provisions of this Article shall have effect in place of the Company Communications Provisions relating to deemed delivery of notices, documents or information.
149	Joint holders
149.1	Anything which needs to be agreed or specified by the joint holders of a share shall for all purposes be taken to be agreed or specified by all the joint holders where it has been agreed or specified by the joint holder whose name stands first in the Register in respect of the share.
149.2	Any notice, document or information which is authorised or required to be sent or supplied to joint holders of a share may be sent or supplied to the joint holder whose name stands first in the Register in respect of the share, to the exclusion of the other joint holders.
149.3	The provisions of this Article shall have effect in place of the Company Communications Provisions regarding joint holders of shares.
150	Deceased and bankrupt members
150.1	A person who claims to be entitled to a share in consequence of the death or bankruptcy of a member or otherwise by operation of law shall supply to the Company:

150.1.1	such evidence as the Directors may reasonably require to show his title to the share; and
150.1.2	an address to which notices may be sent or supplied to such person,

whereupon he shall be entitled to have sent or supplied to him at such address any notice, document or information to which the said member would have been entitled, and in so sending or supplying the relevant notice, document or information such notice, document or information shall for all purposes be deemed as sufficiently sent or supplied to all persons interested (whether jointly with or as claiming through or under him) in the share.

150.2

Save as provided by Article 150.1, any notice, document or information sent or supplied to the address of any member pursuant to these Articles shall, notwithstanding that such

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	member be then dead or bankrupt or in liquidation, and whether or not the Company has notice of his death or bankruptcy or liquidation, be deemed to have been duly sent or supplied in respect of any share registered in the name of such member as sole or first-named joint holder.
150.3	The provisions of this Article shall have effect in place of the Company Communications Provisions regarding the death or bankruptcy or a holder of shares in the Company.
151	Overseas members
	Subject to the Statutes, the Company shall not be required to send notices, documents or information to a member who (having no registered address within the United Kingdom) has not supplied to the Company an address within the United Kingdom for the service of notices. If on three consecutive occasions notices have been sent through the post to any member at his registered address or his address for the service of notices but have been returned undelivered, such member shall not thereafter be entitled to receive notices from the Company until he shall have communicated with the Company and supplied in writing to the Transfer Office a new registered address within the United Kingdom for the service of notices.
152	Suspension of postal services
	If at any time by reason of the suspension or curtailment of postal services within the United Kingdom the Company is unable to give notice by post in hard copy form of a shareholders’ meeting, such notice shall be deemed to have been given to all members entitled to receive such notice in hard copy form if such notice is advertised on the same date in at least two national daily newspapers with appropriate circulation and such notice shall be deemed to have been given on the day when the advertisement appears (or first appears). In any such case, the Company shall (i) make such notice available on its website from the date of such advertisement until the conclusion of the meeting or any adjournment thereof and (ii) send confirmatory copies of the notice by post to such members if at least seven days prior to the meeting the posting of notices again becomes practicable.
153	Statutory provisions as to notices
	Nothing in any of Articles 148-155 inclusive shall affect any provision of the Statutes that requires or permits any particular notice, document or information be sent or supplied in any particular manner.
154	Signature or authentication of documents sent by electronic means
	Where these Articles require a notice or other document to be signed or authenticated by a member or other person then any notice or other document sent or supplied in electronic form is sufficiently authenticated in any manner authorised by the Company Communications Provisions or in such other manner approved by the Directors. The Directors may designate mechanisms for validating any such notice or other document, and any such notice or other document not so validated by use of such mechanisms shall be deemed not to have been received by the Company.

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155 Article deleted by Special Resolution passed on 1 June 2007

Winding up

156	Directors’ powers to petition
	The Directors shall have power in the name and on behalf of the Company to present a petition to the Court for the Company to be wound up.
157	Distribution of assets in specie
	If the Company shall be wound up (whether the liquidation is voluntary, under supervision, or by the Court) the Liquidator may, with the authority of a Special Resolution, divide among the members in specie or kind the whole or any part of the assets of the Company and whether or not the assets shall consist of property of one kind or shall consist of properties of different kinds, and may for such purpose set such value as he deems fair upon any one or more class or classes of property and may determine how such division shall be carried out as between the members or different classes of members. The Liquidator may, with the like authority, vest any part of the assets in trustees upon such trusts for the benefit of members as the Liquidator with the like authority shall think fit, and the liquidation of the Company may be closed and the Company dissolved but so that no contributory shall be compelled to accept any shares or other property in respect of which there is a liability.

Directors’ liabilities

158	Indemnity
158.1	Subject to the provisions of, and so far as may be permitted by and consistent with, the Statutes and rules made by the UK Listing Authority, every Director and officer of the Company and of each of the Associated Companies of the Company shall be indemnified by the Company out of its own funds against:

158.1.1 any liability incurred by or attaching to him in connection with any negligence, default, breach of duty or breach of trust by him in relation to the Company or any Associated Company of the Company in the actual or purported execution and/or discharge of his duties and/or the exercise or purported exercise of his powers other than:

(i)	any liability to the Company or any Associated Company; and
(ii)	any liability of the kind referred to in Section 234(3) of the Companies Act 2006; and

158.1.2 any other liability incurred by or attaching to him in the actual or purported execution and/or discharge of his duties and/or the exercise or purported exercise of his powers and/or otherwise in relation to or in connection with his duties, powers or office.

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	Such indemnity shall extend to liabilities arising after a person ceases to be a Director or an officer of the Company in respect of acts or omissions while he was a Director or an officer if such acts or omissions would have been indemnified had the relevant person remained a Director or officer, as the case may be.
158.2	Subject to the Companies Acts and rules made by the UK Listing Authority the Company may indemnify a Director of the Company and any Associated Company of the Company if it is the trustee of an occupational pension scheme (within the meaning of Section 235(6) of the Companies Act 2006).
158.3	Where a Director or officer is indemnified against any liability in accordance with this Article 158, such indemnity shall extend to all costs, charges, losses, expenses and liabilities incurred by him in relation thereto.
158.4	In this Article 158 “Associated Company” shall have the meaning given thereto by Section 256 of the Companies Act 2006.
158A	Insurance
158A.1	Without prejudice to Article 158 above, the Directors shall have power to purchase and maintain insurance for or for the benefit of:

158A.1.1	any person who is or was at any time a Director or officer of any Relevant Company (as defined in Article 158A.2 below); or
158A.1.2	any person who is or was at any time a trustee of any pension fund or employees’ share scheme in which employees of any Relevant Company are interested,

including (without prejudice to the generality of the foregoing) insurance against any liability incurred by or attaching to him in respect of any act or omission in the actual or purported execution and/or discharge of his duties and/or in the exercise or purported exercise of his powers and/or otherwise in relation to his duties, powers or offices in relation to any Relevant Company, or any such pension fund or employees’ share scheme (and all costs, charges, losses, expenses and liabilities incurred by him in relation thereto).

158A.2

For the purpose of Article 158A.1 above, “Relevant Company” shall mean:

158A.2.1	the Company;
158A.2.2	any holding company of the Company;
158A.2.3	any other body, whether or not incorporated, in which the Company or such holding company or any of the predecessors of the Company or of such holding company has or had any interest whether direct or indirect or which is in any way allied to or associated with the Company;
158A.2.4	any subsidiary undertaking of the Company or of such other body.

158B	Defence expenditure
158B.1	Subject to the provisions of and so far as may be permitted by the Statutes and rules made by the UK Listing Authority, the Company:

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158B.1.1 may provide any current or former Director or officer of the Company or any Associated Company of the Company with funds to meet expenditure incurred or to be incurred by him in:

(i)	defending any criminal or civil proceedings in connection with any alleged negligence, default, breach of duty or breach of trust by him in relation to the Company or an Associated Company of the Company; or
(ii)	in connection with any application for relief under the provisions mentioned in Section 205(5) of the Companies Act 2006; and

158B.1.2 may do anything to enable any such Director or officer to avoid incurring such expenditure.

158B.2

The terms set out in Section 205(2) of the Companies Act 2006 shall apply to any provision of funds or other things done under Article 158B.1 provided that, for the purpose of this Article 158B.2, references to “director” in Section 205(2) of the Companies Act 2006 shall be deemed to include references to a former Director or a current or former officer of the Company or an Associated Company of the Company.

158B.3

Subject to the provisions of and so far as may be permitted by the Statutes and rules made by the UK Listing Authority, the Company:

(a)

may provide a Director or officer of the Company or any Associated Company of the Company with funds to meet expenditure incurred or to be incurred by him in defending himself in an investigation by a regulatory authority or against action proposed to be taken by a regulatory authority in connection with any alleged negligence, default, breach of duty or breach of trust by him in relation to the Company or any Associated Company of the Company; and

(b)

may do anything to enable any such Director or officer to avoid incurring such expenditure.

158B.4 In this Article 158B “Associated Company” shall have the meaning given thereto by Section 256 of the Companies Act 2006.

Overriding Provisions

159	Overriding provisions
159.1	If and for so long as the Company shall hold any class of security of Six Continents Hotels Inc. the provisions of this Article shall apply and to the extent of any inconsistency shall have overriding effect as against all other provisions of these Articles.
159.2	For the purposes of this Article the words and expressions set out below shall bear the meanings set opposite them respectively:
	“Disqualified Person” means any holder of any class of shares of the Company whose holding of such shares, either individually or when taken together with the holding of any class of shares of the Company by any other holders, may result, in the opinion of the Directors, in the loss, or the failure to secure the reinstatement, of any licence or franchise from any United States’ governmental agency held by Six Continents Hotels Inc. or any

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	subsidiary thereof to conduct any portion of the business of Six Continents Hotels Inc. or any subsidiary thereof.
	“Relevant Shares” means shares of the Company comprised in the interest or holding of a Disqualified Person.
	“Required Disposal” means the sale and transfer of Relevant Shares or of interests therein in such manner as may be required to cause such shares to cease to be Relevant Shares.
159.3

159.3.1 The Directors may at any time serve a notice upon any member requiring him to furnish the Directors with information (in the case of (ii) below, to the extent that such paragraph applies to any person other than the member so far as such information lies within the knowledge of such member), supported by a declaration and by such other evidence (if any) in support as the Directors may require, for the purpose of determining:

(i)	whether such member is a party to an agreement or arrangement (whether legalIy enforceable or not) whereby any of the shares held by him are to be voted in accordance with some other person’s instructions (whether given by that other person directly or through any other person); or
(ii)	whether such member and/or any other person who has an interest in any shares held by such member is a Disqualified Person.

	If such information and evidence is not furnished within a reasonable period (not being less than 14 days) from the date of service of such notice or the information and evidence provided is, in the opinion of the Directors, unsatisfactory for the purposes of so determining, the Directors may serve upon such member a further notice calling upon him, within 14 days after the service of such further notice, to furnish the Directors with such information and evidence or further information and evidence as shall (in their opinion) enable them so to determine.
159.3.2	Any person holding any share of the Company shall notify the Directors forthwith in writing if he, or to his knowledge any person controlling or beneficially owning or otherwise having an interest in such share, is likely to be or become a Disqualified Person.
159.3.3	The Directors may assume without enquiry that a person is not or will not become a Disqualified Person unless the information obtained by them above or a notification under this Article 159.3 indicates to the contrary or the Directors have reason to believe otherwise; in these circumstances the Directors shall use all reasonable endeavours to discover whether the person concerned is a Disqualified Person.

159.4

159.4.1 If any person becomes or is determined in accordance with paragraph 159.3.3 above to be a Disqualified Person the Directors shall serve a written notice (a “Disposal Notice”) on all those who (to the knowledge of the Directors) have interests in, and, if different, on the holder or holders of, the Relevant Shares. The Disposal Notice shall refer to the voting restrictions as set out in Article 159.6 below and shall call for a Required Disposal to be made and for reasonable evidence that

57

	such Required Disposal shall have been effected to be supplied to the Company within 21 days from the date of such notice or such other period as the Directors may consider reasonable and which they may extend. The Directors may withdraw a Disposal Notice (whether before or after the expiration of the period referred to) if it appears to them that there is no Disqualified Person in relation to the shares concerned.
159.4.2	If a Disposal Notice served under paragraph 159.4.1 above is not complied with to the satisfaction of the Directors and has not been withdrawn, the Directors shall, so far as they are able, sell the shares comprised in such Disposal Notice, at the best price reasonably obtainable in all the circumstances and shall give written notice of such disposal to those persons on whom the Disposal Notice was served. Except as hereinafter provided such a sale shall be completed as soon as reasonably practicable after expiry of the Disposal Notice as may in the opinion of the Directors be consistent with obtaining the best price reasonably obtainable and in any event within 30 days of expiry of such notice provided that such a sale shall be postponed during the period when dealings by the Directors in the Company’s shares are not permitted either by law or by Regulations of the London Stock Exchange but any sale postponed as aforesaid shall be completed within 30 days after expiry of the period of such suspension and provided further that neither the Company nor the Director shall be liable to any holder or any person having an interest in any share or other person for failing to obtain the best price so long as the Directors act in good faith within the period specified above.
159.4.3	For the purpose of effecting any Required Disposal, the Directors may authorise in writing an officer or employee of the Company to execute any necessary transfer on behalf of any holder and may issue a new certificate to the purchaser. The net proceeds of such disposal shall be received by the Company, whose receipt shall be a good discharge for the purchase money, and shall be paid (without any interest being payable thereon) to the former holder upon surrender by him of the certificate in respect of the shares sold and formerly held by him.

159.5

159.5.1	The Directors shall not be obliged to serve any notice under the foregoing provisions of this Article upon any person if they do not know his identity or his address and the absence of service of such a notice in such circumstances as aforesaid and any accidental error in, or failure to give any notice to any person upon whom notice is required to be served under the foregoing provisions shall not prevent the implementation of or invalidate any procedure thereunder.
159.5.2	Any notice to be served under this Article upon a person who is not a member shall be deemed validly served if sent through the post to that person at the address, if any, at which the Directors believe him to be resident or carrying on business. Any such notice shall be deemed served on the day following any day on which it was put in the post and, in proving service, it shall be sufficient to prove that the notice was properly addressed, stamped and put in the post.
159.5.3	Any determination of the Directors under the foregoing provision of this Article shall be final and conclusive, but without prejudice to the power of the Directors subsequently to vary or revoke such determination.

58

159.6

159.6.1	If in accordance with Article 159.3 above the Directors shall have assumed that any person is not a Disqualified Person, the exercise by that person and/or, if shares owned or controlled by such person are held by another person or by other persons, by such other person or persons shall not be challenged or invalidated by any subsequent determination by the Directors that such person is a Disqualified Person.
159.6.2	If any person becomes or is determined by the Directors to be a Disqualified Person the Directors shall serve written notice on such person and, if different, on the holder or holders of the shares owned or controlled by such person to the effect that he has been determined to be a Disqualified Person.
159.6.3	With effect from the expiration of such period as the Directors shall specify in the notice under paragraph 159.6.2 above (not being longer than 30 days from the date of service of such notice) the said person and, if different, the holder or holders of the shares owned or controlled by such person (to the extent that such holder or holders is/are not able to prove to the satisfaction of the Directors that shares registered in his/their name(s) are not owned or controlled by such person) shall not be entitled to receive notice of, or to attend or vote at, any General Meeting of the Company or any meeting of the holders of any class of shares.
159.6.4	Any member who has pursuant to paragraph 159.3.1 above been served with a further notice by the Directors requiring him to furnish the Directors with information and evidence or further information or evidence within 14 days after the service of such further notice shall not, with effect from the expiration of such period and until information or evidence is furnished to the satisfaction of the Directors, be entitled to receive notice of, or to attend or vote at, any General Meeting of the Company or meeting of the holders of any class of shares other than in respect of such of the shares held by such member as are shares in respect of which it shall have been established to the satisfaction of the Directors that they are not shares in which a Disqualified Person has an interest or shares in respect of which the Directors may require a disposal pursuant to the provisions of Article 159.4 above.

159.7 No person shall be capable of being appointed or continuing as a Director if, in the opinion of the Directors, his directorship of the Company may result in the loss, or the failure to secure the reinstatement, of any licence or franchise from any United States governmental agency held by Six Continents Hotels Inc. or any subsidiary thereof to conduct any portion of the business of Six Continents Hotels Inc. or any subsidiary thereof.

59

Index

	Article No.		Page No.
Accounts		144-145		51
Auditors		146-147		51
Authentication of Documents		126		45
Borrowing Powers		112-113		42
Capitalisation of Profits and Shares		141-142		48-50
Communications with Members		148-155		51-54
Corporations Acting by Representatives		79		30
Directors		80-88		30-31
Alternate		98-101		34
Appointment and Retirement of		89-97		31-34
Departmental, Divisional or Local		120		43-44
General Powers of		114-118		42-43
Meetings and Proceedings of		102-111		35-41
Liabilities of		158-158B		54
Dividends		128-140		45-48
Evidence of Title to Securities		17		12
Forfeiture and Lien		29-36		14-16
General Meetings		49-50		20-21
Notice of		51-52		21-22
Overflow of		53-55		22
Proceedings at		56-66		22-24
Minutes		143		50
Overriding Provisions		159		56-59
Preliminary		1-2		1-6
President		119		43
Proxies		73-78		27-29
Record Date		125		45
Reserves		127		45
The Seal		122-124		44
Secretary		121		44
Share Capital		3-4		6-7

60

	Article No.		Page No.
Alteration of		7-11		8-10
Variation of Rights		5-6		7-8
Share Certificates		18-22		12-13
Shares		12-16		10-12
Calls on		23-28		13-14
Transfer of		37-43		16-19
Transmission of		44-46		19
Untraced Shareholders		47-48		20
Votes of Members		67-72		24-27
Winding Up		156-157		54

61

EX-4.A.I

Exhibit 4ai

Execution Copy

$2,100,000,000

FACILITY AGREEMENT

dated 2 May 2008

for

INTERCONTINENTAL HOTELS GROUP PLC

arranged by

BANK OF AMERICA, N.A.
THE BANK OF TOKYO-MITSUBISHI UFJ, LTD.
BARCLAYS CAPITAL
HSBC BANK PLC
LLOYDS TSB CORPORATE MARKETS
THE ROYAL BANK OF SCOTLAND PLC
SOCIÉTÉ GÉNÉRALE CORPORATE & INVESTMENT BANKING
and
WESTLB AG, LONDON BRANCH

with

HSBC BANK plc

acting as Agent

Linklaters

Linklaters LLP

Ref: PHPS/NYM/LBN

CONTENTS

CLAUSE	PAGE
SECTION 1
INTERPRETATION
1. Definitions and interpretation		1
SECTION 2
THE FACILITIES
2. The Facilities		14
3. Purpose		15
4. Conditions of Utilisation		15
SECTION 3
UTILISATION
5. Utilisation		17
6. Optional Currencies		18
SECTION 4
REPAYMENT, PREPAYMENT AND CANCELLATION
7. Repayment		21
8. Prepayment and cancellation		21
SECTION 5
COSTS OF UTILISATION
9. Interest		26
10. Interest Periods		27
11. Changes to the calculation of interest		28
12. Fees		29
SECTION 6
ADDITIONAL PAYMENT OBLIGATIONS
13. Tax gross-up and indemnities		30
14. Increased costs		36
15. Other indemnities		37
16. Mitigation by the Lenders		38
17. Costs and expenses		38
SECTION 7
GUARANTEE
18. Guarantee and indemnity		40
SECTION 8
REPRESENTATIONS, UNDERTAKINGS AND EVENTS OF DEFAULT
19. Representations		43
20. Information undertakings		44
21. Financial covenants		48
22. General undertakings		50
23. Events of Default		55
SECTION 9
CHANGES TO PARTIES
24. Changes to the Lenders		58
25. Changes to the Obligors		61

i

CLAUSE	PAGE
SECTION 10
THE FINANCE PARTIES
26. Role of the Agent and the Arranger		63
27. Conduct of business by the Finance Parties		67
28. Sharing among the Finance Parties		67
SECTION 11
ADMINISTRATION
29. Payment mechanics		69
30. Set-off		71
31. Notices		71
32. Calculations and certificates		73
33. Partial invalidity		73
34. Remedies and waivers		73
35. Amendments and waivers		73
36. Counterparts		74
SECTION 12
GOVERNING LAW AND ENFORCEMENT
37. Governing law		75
38. Enforcement		75

ii

THIS AGREEMENT is dated 2 May 2008 and made between:

(1)	INTERCONTINENTAL HOTELS GROUP PLC incorporated in England and Wales with registration number 05134420 (the “Company”);
(2)	SIX CONTINENTS LIMITED incorporated in England and Wales with registration number 913450 and INTERCONTINENTAL HOTELS LIMITED incorporated in England and Wales with registration number 4551528 (together with the Company, the “Original Borrowers”);
(3)	SIX CONTINENTS LIMITED incorporated in England and Wales with registration number 913450 and INTERCONTINENTAL HOTELS LIMITED incorporated in England and Wales with registration number 4551528 (together with the Company, the “Original Guarantors”);
(4)	BANK OF AMERICA, N.A., THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., BARCLAYS CAPITAL, HSBC BANK PLC, LLOYDS TSB CORPORATE MARKETS, THE ROYAL BANK OF SCOTLAND PLC, SOCIÉTÉ GÉNÉRALE CORPORATE & INVESTMENT BANKING and WESTLB AG, LONDON BRANCH as mandated lead arrangers (whether acting individually or together the “Arranger”);
(5)	THE FINANCIAL INSTITUTIONS listed in Schedule 1 as lenders (the “Original Lenders”); and
(6)	HSBC Bank plc as agent of the other Finance Parties (the “Agent”).

IT IS AGREED as follows:

SECTION 1

INTERPRETATION

1.	DEFINITIONS AND INTERPRETATION
1.1	Definitions
	In this Agreement:
	“Accession Letter” means a document substantially in the form set out in Schedule 6 (Form of Accession Letter).
	“Additional Borrower” means a company which becomes an Additional Borrower in accordance with Clause 25 (Changes to the Obligors).
	“Additional Cost Rate” has the meaning given to it in Schedule 4 (Mandatory Cost formulae).
	“Additional Guarantor” means a company which becomes an Additional Guarantor in accordance with Clause 25 (Changes to the Obligors).
	“Additional Obligor” means an Additional Borrower or an Additional Guarantor.
	“Affiliate” means, in relation to any person, a Subsidiary of that person or a Holding Company of that person or any other Subsidiary of that Holding Company.
	“Agent’s Spot Rate of Exchange” means the spot rate of exchange at which the Agent is able to purchase the relevant currency with the Base Currency in the London foreign exchange market at or about 11:00 a.m. on a particular day.

“Applicable Accounting Principles” means those accounting principles, standards and practices on which the preparation of the Original Financial Statements was based and those accounting policies which were used in the preparation of those financial statements.

“Authorisation” means an authorisation, consent, approval, resolution, licence, exemption, filing, notarisation or registration.

“Availability Period” means:

(a)	in relation to Facility A, the period from and including the date of this Agreement to and including the date falling one month prior to the Termination Date applicable to Facility A; and
(b)	in relation to Facility B, the period from and including the date of this Agreement to and including the date which is one week after the date of this Agreement.

“Available Commitment” means, in relation to a Facility, a Lender’s Commitment under that Facility minus:

(a)	the Base Currency Amount of its participation in any outstanding Loans under that Facility; and
(b)	in relation to any proposed Utilisation, the Base Currency Amount of its participation in any Loans that are due to be made under that Facility on or before the proposed Utilisation Date,

other than, in relation to any proposed Utilisation under Facility A only, that Lender’s participation in any Facility A Loans that are due to be repaid or prepaid on or before the proposed Utilisation Date.

“Available Facility” means, in relation to a Facility, the aggregate for the time being of each Lender’s Available Commitment in respect of that Facility.

“Base Currency” or “$” means US Dollars.

“Base Currency Amount” means, in relation to a Loan, the amount specified in the Utilisation Request delivered by a Borrower for that Loan (or, if the amount requested is not denominated in the Base Currency, that amount converted into the Base Currency at the Agent’s Spot Rate of Exchange on the date which is three Business Days before the Utilisation Date or, if later, on the date the Agent receives the Utilisation Request) adjusted to reflect any repayment (other than, in relation to Facility B, a repayment arising from a change of currency), prepayment, consolidation or division of the Loan.

“Borrower” means an Original Borrower or an Additional Borrower, unless it has ceased to be a Borrower in accordance with Clause 25 (Changes to the Obligors).

“Borrowings” has the meaning given to it in Clause 21 (Financial covenants).

“Break Costs” means the amount (if any) by which:

(a) the interest (excluding the Margin and Mandatory Costs) which a Lender should have received for the period from the date of receipt of all or any part of its participation in a Loan or Unpaid Sum to the last day of the current Interest Period in respect of that Loan

2

or Unpaid Sum, had the principal amount or Unpaid Sum received been paid on the last day of that Interest Period;

exceeds:

(b) the amount which that Lender would be able to obtain by placing an amount equal to the principal amount or Unpaid Sum received by it on deposit with a leading bank in the Relevant Interbank Market for a period starting on the Business Day following receipt or recovery and ending on the last day of the current Interest Period.

“Business Day” means a day (other than a Saturday or Sunday) on which banks are open for general business in London and:

(a)	(in relation to any date for payment, purchase or sale of a currency other than euro) the principal financial centre of the country of that currency; or
(b)	(in relation to any date for payment, purchase or sale of euro) any TARGET Day.

“Cash” has the meaning given to it in Clause 21 (Financial covenants).

“Cash Equivalents” has the meaning given to it in Clause 21 (Financial covenants).

“Commitment” means a Facility A Commitment or a Facility B Commitment.

“Compliance Certificate” means a certificate substantially in the form set out in Schedule 8 (Form of Compliance Certificate).

“Confidentiality Undertaking” means a confidentiality undertaking in the form set out in Schedule 11 (Form of LMA Confidentiality Undertaking) or in any other form agreed between the Company and the Agent.

“Consolidated Gross Assets” means the consolidated current assets plus consolidated non-current assets of the Group.

“Default” means an Event of Default or any event or circumstance specified in Clause 23 (Events of Default) which would (with the expiry of a grace period and/or the giving of notice) be an Event of Default.

“EBITDA” has the meaning given to it in Clause 21 (Financial covenants).

“EURIBOR” means, in relation to any Loan in euro:

(a)	the applicable Screen Rate; or
(b)	(if no Screen Rate is available for the Interest Period of that Loan) the arithmetic mean of the rates (rounded upwards to four decimal places) as supplied to the Agent at its request quoted by the Reference Banks to leading banks in the European interbank market,

as of the Specified Time on the Quotation Day for the offering of deposits in euro for a period comparable to the Interest Period of the relevant Loan.

“euro” or “€” means the single currency of the Participating Member States.

“Event of Default” means any event or circumstance specified as such in Clause 23 (Events of Default).

3

“Existing Facility” means the £1,600,000,000 facility agreement dated 9 November 2004 (as amended from time to time) between the Company, the lenders and arrangers named in it and HSBC Bank plc as agent.

“Facility” means Facility A or Facility B.

“Facility A” means the revolving loan facility made available under this Agreement as described in paragraph (a) of Clause 2.1 (The Facilities).

“Facility A Commitment” means:

(a)	in relation to an Original Lender, the amount in the Base Currency set opposite its name under the heading “Facility A Commitment” in Schedule 1 (The Original Lenders) and the amount of any other Facility A Commitment transferred to it under this Agreement; and
(b)	in relation to any other Lender, the amount in the Base Currency of any Facility A Commitment transferred to it under this Agreement,

to the extent not cancelled, reduced or transferred by it under this Agreement.

“Facility A Loan” means a loan made or to be made under Facility A or the principal amount outstanding for the time being of that loan.

“Facility B” means the term loan facility made available under this Agreement as described in paragraph (b) of Clause 2.1 (The Facilities).

“Facility B Commitment” means:

(a)	in relation to an Original Lender, the amount in the Base Currency set opposite its name under the heading “Facility B Commitment” in Schedule 1 (The Original Lenders) and the amount of any other Facility B Commitment transferred to it under this Agreement; and
(b)	in relation to any other Lender, the amount in the Base Currency of any Facility B Commitment transferred to it under this Agreement,

to the extent not cancelled, reduced or transferred by it under this Agreement.

“Facility B Loan” means a loan made or to be made under Facility B or the principal amount outstanding for the time being of that loan.

“Facility B Repayment Date” means the Termination Date applicable to Facility B.

“Facility Office” means the office or offices notified by a Lender to the Agent in writing on or before the date it becomes a Lender (or, following that date, by not less than five Business Days’ written notice) as the office or offices through which it will perform its obligations under this Agreement.

“Fee Letter” means any letter or letters dated on or about the date of this Agreement between the Arranger and the Company (or the Agent and the Company) setting out any fees referred to in Clause 12 (Fees).

“Finance Document” means this Agreement, any Fee Letter, any Accession Letter, any Resignation Letter and any other document designated as such by the Agent and the Company.

“Finance Party” means the Agent, the Arranger or a Lender.

4

“Financial Indebtedness” means any indebtedness (without double counting) for or in respect of:

(a)	moneys borrowed;
(b)	any amount raised by acceptance under any acceptance credit facility or dematerialised equivalent;
(c)	any amount raised pursuant to any note purchase facility or the issue of bonds, notes, debentures, loan stock, commercial paper or any similar instrument (entered into or issued primarily as a method of raising finance);
(d)	the amount of any liability in respect of any lease or hire purchase contract which would, in accordance with IFRS, be treated as a finance or capital lease;
(e)	receivables sold or discounted (other than any receivables to the extent they are sold or discounted on a non-recourse basis);
(f)	any amount:

(i)	raised under any other transaction (including any forward sale or purchase agreement) required by IFRS to be shown as a borrowing in the audited consolidated balance sheet of the Group; or
(ii)	raised under any other transaction entered into primarily as a method of raising finance not required by IFRS to be shown as a borrowing in the audited consolidated balance sheet of the Group;

(g)	for the purpose of Clause 23.5 (Cross default) only, any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price (and, when calculating the value of any derivative transaction, only the marked to market value shall be taken into account);
(h)	shares which are expressed to be redeemable prior to the Termination Date for Facility A;
(i)	any counter-indemnity obligation in respect of a guarantee, indemnity, bond, letter of credit or any other instrument issued by a bank or financial institution; and
(j)	the amount of any liability in respect of any guarantee or indemnity for any of the items referred to in paragraphs (a) to (i) above,

but excluding indebtedness owing by a member of the Group to another member of the Group.

“Group” means the Company and its Subsidiaries for the time being.

“Guarantor” means an Original Guarantor or an Additional Guarantor, unless it has ceased to be a Guarantor in accordance with Clause 25 (Changes to the Obligors).

“Holding Company” means, in relation to a company or corporation, any other company or corporation in respect of which it is a Subsidiary.

“IFRS” means international accounting standards within the meaning of IAS Regulation 1606/2002 to the extent applicable to the relevant financial statements.

“Income Tax Act” means the Income Tax Act 2007.

5

“Interest Expense” has the meaning given to it in Clause 21 (Financial covenants).

“Interest Period” means, in relation to a Loan, each period determined in accordance with Clause 10 (Interest Periods) and, in relation to an Unpaid Sum, each period determined in accordance with Clause 9.3 (Default interest).

“Joint Venture Entity” means any joint venture company, corporation, partnership, trust or other entity in any jurisdiction in which a member of the Group owns 50 per cent. or less of the issued share capital, equity or voting rights.

“Lender” means:

(a)	any Original Lender; and
(b)	any bank, financial institution, trust, fund or other entity which has become a Party in accordance with Clause 24 (Changes to the Lenders),

which in each case has not ceased to be a Party in accordance with the terms of this Agreement.

“LIBOR” means, in relation to any Loan:

(a)	the applicable Screen Rate; or
(b)	(if no Screen Rate is available for the currency or Interest Period of that Loan) the arithmetic mean of the rates (rounded upwards to four decimal places) as supplied to the Agent at its request quoted by the Reference Banks to leading banks in the London interbank market,

as of the Specified Time on the Quotation Day for the offering of deposits in the currency of that Loan and for a period comparable to the Interest Period for that Loan.

“LMA” means the Loan Market Association.

“Loan” means a Facility A Loan or a Facility B Loan.

“Majority Lenders” means a Lender or Lenders whose Commitments aggregate more than 66²/₃ per cent. of the Total Commitments (or, if the Total Commitments have been reduced to zero, aggregated more than 66²/₃ per cent. of the Total Commitments immediately prior to the reduction).

“Managed Assets” means any assets (including, for the avoidance of doubt, any equity interest in any such asset) of a member of the Group which are sold and become, or remain, the subject of a management or franchise agreement in favour of the Group.

“Mandatory Cost” means the percentage rate per annum calculated by the Agent in accordance with Schedule 4 (Mandatory Cost formulae).

“Margin” means at any time the rate per annum determined by reference to the ratio of Net Borrowings, as at the last day of the last preceding Margin Period, to EBITDA for that Margin Period (the “Margin Ratio”) in accordance with the following table:

6

	Margin (per cent. p.a.)
Net Borrowings/EBITDA	Facility A		Facility B
Lower than 3.75:1 but higher than 3.25:1		1.05		0.95
Equal to or lower than 3.25:1 but		0.85		0.75
higher than 2.75:1
Equal to or lower than 2.75:1 but		0.75		0.65
higher than 2.25:1
Equal to or lower than 2.25:1 but		0.625		0.575
higher than 1.75:1
Equal to or lower than 1.75:1 but		0.575		0.525
higher than 1.25:1
Equal to or lower than 1.25:1		0.525		0.475

However:

(a)	until the delivery of the first Margin Certificate required pursuant to Clause 20.3 (Margin Certificate) the applicable Margin shall be 0.85 per cent. per annum in respect of Facility A and 0.75 per cent. per annum in respect of Facility B;
(b)	any increase or decrease in the applicable Margin, as the case may be, will take effect for all purposes under this Agreement from the date falling 2 Business Days after receipt by the Agent of a Margin Certificate as required pursuant to Clause 20.3 (Margin Certificate);
(c)	if the Company does not deliver the relevant Margin Certificate to the Agent in accordance with the terms of Clause 20.3 (Margin Certificate), the Margin shall, as from the date immediately following the last date on which such Margin Certificate should have been delivered until the date such Margin Certificate is delivered, be 1.05 per cent. per annum in respect of Facility A and 0.95 per cent. per annum in respect of Facility B;
(d)	if at any time an Event of Default is continuing, the Margin for Facility A and Facility B shall, until the date such Event of Default ceases to be continuing, be 1.05 per cent. per annum in respect of Facility A and 0.95 per cent. per annum in respect of Facility B;
(e)	if at any time a decrease in the Margin is to take effect a Default is continuing, such decrease shall not take effect at that time but such decrease shall take effect with effect from the date such Default ceases to be continuing; and
(f)	in this definition, “EBITDA” shall have the same meaning as EBITDA as defined in Clause 21.3 (Definitions) save that the reference to “Relevant Period” in that definition

7

shall, for the purposes of calculating the Margin, be substituted with “Margin Period” and EBITDA shall be adjusted to take into account the pro forma impact of any acquisitions or disposals (other than of Managed Assets) made during the Margin Period by a member of the Group.

“Margin Certificate” means a certificate substantially in the form set out in Schedule 12 (Form of Margin Certificate).

“Margin Period” means the period of 12 months ending on each Quarter Date.

“Margin Ratio” has the meaning given to it in the definition of Margin.

“Material Adverse Effect” means a material adverse effect on:

(a)	the ability of the Obligors (taken as a whole) to perform and comply with their payment obligations under any Finance Document; or
(b)	the ability of the Company to perform and comply with its obligations under Clause 21 (Financial covenants).

“Material Subsidiary” means, at any time, any Subsidiary of the Company:

(a)

whose gross assets represent 5 per cent. or more of Consolidated Gross Assets or whose EBITDA represents 5 per cent. or more of consolidated EBITDA of the Group, in each case, as calculated by reference to the latest financial statements of such Subsidiary (which shall be audited if such statements are prepared by that Subsidiary) and the latest audited consolidated financial statements of the Group adjusted in such manner as the auditors of the Company may determine (which determination shall be conclusive in the absence of manifest error) (i) to reflect the gross assets and EBITDA of any person which has become or ceased to be a member of the Group since the end of the financial year to which the latest audited consolidated financial statements of the Group relate where such adjustment is requested by the Company and (ii) so that for the purposes of this definition, the gross assets of the relevant Subsidiary shall be calculated on the same basis as Consolidated Gross Assets are calculated and/or, as the case may be, EBITDA of the relevant Subsidiary shall be calculated on the same basis as consolidated EBITDA for the Group (but, in each case, relating only to the relevant Subsidiary) and making such adjustments and eliminations as are required to show the same as the contribution of the relevant Subsidiary to Consolidated Gross Assets and/or, as the case may be, consolidated EBITDA of the Group; or

(b)

to which is transferred all or substantially all of the business, undertaking or assets of a Subsidiary which immediately prior to such transfer is a Material Subsidiary, whereupon the transferor Subsidiary shall cease to be a Material Subsidiary and the transferee Subsidiary shall become a Material Subsidiary under this sub-paragraph (b) upon the completion of such transfer.

Any determination made by the auditors of the Company as to whether a Subsidiary of the Company is or is not a Material Subsidiary at any time shall be conclusive in the absence of manifest error.

8

“Month” means a period starting on one day in a calendar month and ending on the numerically corresponding day in the next calendar month, except that:

(a)	if the numerically corresponding day is not a Business Day, that period shall end on the next Business Day in that calendar month in which that period is to end if there is one, or if there is not, on the immediately preceding Business Day; and
(b)	if there is no numerically corresponding day in the calendar month in which that period is to end, that period shall end on the last Business Day in that calendar month.

The above rules will only apply to the last Month of any period.

“Moody’s” means Moody’s Investors Services Inc..

“Net Borrowings” has the meaning given to it in Clause 21 (Financial covenants).

“Net Interest Payable” has the meaning given to it in Clause 21 (Financial covenants).

“Obligor” means the Company, a Borrower or a Guarantor.

“Optional Currency” means a currency (other than the Base Currency) which complies with the conditions set out in Clause 4.3 (Conditions relating to Optional Currencies).

“Original Financial Statements” means the audited consolidated financial statements of the Group for the financial period ended 31 December 2007.

“Original Obligor” means an Original Borrower or an Original Guarantor.

“Participating Member State” means any member state of the European Communities that adopts or has adopted the euro as its lawful currency in accordance with legislation of the European Community relating to Economic and Monetary Union.

“Party” means a party to this Agreement.

“Project Finance Indebtedness” means Financial Indebtedness (in respect of which Security has been given) incurred by a member of the Group (a “Project Group Member”) for the purposes of financing the acquisition, construction, development and/or operation of an asset (a “Project Asset”) where the provider of the Financial Indebtedness has no recourse against any member of the Group, except for recourse to:

(a)	the Project Asset of the Project Group Member or receivables arising from the Project Asset;
(b)	a Project Group Member for the purpose of enforcing Security given by it so long as:

(i)

the recourse is limited to recoveries in respect of the Project Asset; and

(ii)

if the Project Asset does not comprise all or substantially all of the business of that Project Group Member, the provider of the Financial Indebtedness does not have the right to take any steps towards its winding up or dissolution or the appointment of a liquidator, administrator, receiver or similar officer or person, other than in respect of the Project Asset or receivables arising therefrom; or

(c) a member of the Group to the extent only of its shareholding in a Project Group Member.

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“Project Group Member” has the meaning given to it in the definition of Project Finance Indebtedness provided that the principal assets and business of such member of the Group is constituted by Project Assets and it has no other Financial Indebtedness except Project Finance Indebtedness.

“Qualifying Lender” has the meaning given to it in Clause 13 (Tax gross-up and indemnities).

“Quarter Date” means each 31 March, 30 June, 30 September and 31 December in each financial year of the Company.

“Quotation Day” means, in relation to any period for which an interest rate is to be determined:

(a)	(if the currency is Sterling) the first day of that period;
(b)	(if the currency is euro) two TARGET Days before the first day of that period; or
(c)	(for any other currency) two Business Days before the first day of that period,

unless market practice differs in the Relevant Interbank Market for a currency, in which case the Quotation Day for that currency will be determined by the Agent in accordance with market practice in the Relevant Interbank Market (and if quotations for that currency and period would normally be given by leading banks in the Relevant Interbank Market on more than one day, the Quotation Day will be the last of those days).

“Reference Banks” means, in relation to LIBOR, Mandatory Costs and EURIBOR the principal London offices of Barclays Bank PLC, HSBC Bank plc and The Royal Bank of Scotland plc or such other banks as may be appointed by the Agent in agreement with the Company (such agreement not to be unreasonably withheld).

“Relevant Interbank Market” means, in relation to euro, the European interbank market and, in relation to any other currency, the London interbank market.

“Relevant Period” has the meaning given to it in Clause 21 (Financial covenants).

“Repeating Representations” means each of the representations set out in Clauses 19.1 (Status) to 19.4 (Power and authority), paragraph (a) of Clause 19.6 (No Default) and 19.8 (Pari passu ranking).

“Resignation Letter” means a letter substantially in the form set out in Schedule 7 (Form of Resignation Letter).

“Rollover Loan” means one or more Facility A Loans:

(a)	made or to be made on the same day that one or more maturing Facility A Loans is or are due to be repaid;
(b)	the aggregate amount of which is equal to or less than the maturing Facility A Loan(s) (unless it is more than the maturing Facility A Loan(s) solely because it arose as a result of the operation of Clause 6.2 (Unavailability of a currency));
(c)	in the same currency as the maturing Facility A Loan(s) (unless it arose as a result of the operation of Clause 6.2 (Unavailability of a currency)); and
(d)	made or to be made to the same Borrower for the purpose of refinancing the maturing Facility A Loan(s).

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“Screen Rate” means:

(a)	in relation to LIBOR, the British Bankers Association Interest Settlement Rate for the relevant currency and period; and
(b)	in relation to EURIBOR, the percentage rate per annum determined by the Banking Federation of the European Union for the relevant period,

displayed on the appropriate page of the Reuters screen. If the agreed page is replaced or service ceases to be available, the Agent may specify another page or service displaying the appropriate rate after consultation with the Company and the Lenders.

“Security” means a mortgage, pledge, lien, hypothecation, security interest or other charge or encumbrance entered into for the purpose of securing any obligation of any person.

“Selection Notice” means a notice substantially in the form set out in Part II of Schedule 3 (Requests) given in accordance with Clause 10 (Interest Periods) in relation to Facility B.

“Specified Time” means a time determined in accordance with Schedule 10 (Timetables).

“Sterling” or “£” means the lawful currency for the time being of the United Kingdom.

“Subsidiary” means a subsidiary within the meaning of section 736 of the Companies Act 1985 and, for the purpose of Clause 21 (Financial covenants) and in relation to financial statements of the Group, a subsidiary undertaking within the meaning of section 258 of the Companies Act 1985, but in this Agreement “Subsidiary” shall for all purposes exclude each Project Group Member.

“Super-Majority Lenders” means a Lender or Lenders whose Commitments aggregate more than 80 per cent. of the Total Commitments (or, if the Total Commitments have been reduced to zero, aggregated more than 80 per cent. of the Total Commitments immediately prior to the reduction).

“TARGET” means the Trans-European Automated Real-time Gross Settlement Express Transfer payment system which utilises interlinked national real time gross settlement systems and the European Central Bank’s payment mechanism and which began operations on 4 January 1999.

“TARGET2” means the Trans-European Automated Real-time Gross Settlement Express Transfer payment system which utilises a single shared platform and which was launched on 19 November 2007.

“TARGET Day” means:

(a)	until such time as TARGET is permanently closed down and ceases operations, any day on which both TARGET and TARGET2 are; and
(b)	following such time as TARGET is permanently closed down and ceases operations, any day on which TARGET2 is,

open for the settlement of payments in euro.

“Tax” means any tax, levy, impost, duty or other charge or withholding of a similar nature (including any penalty or interest payable in connection with any failure by an Obligor to pay or any delay in paying by an Obligor any of the same).

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“Taxes Act” means the Income and Corporation Taxes Act 1988.

“Termination Date” means:

(a)	in relation to Facility A, the date which is 60 Months after the date of this Agreement; and
(b)	in relation to Facility B the date which is 30 Months after the date of this Agreement.

“Total Commitments” means the aggregate of the Total Facility A Commitments and the Total Facility B Commitments being $2,100,000,000 at the date of this Agreement.

“Total Facility A Commitments” means the aggregate of the Facility A Commitments, being $1,600,000,000 at the date of this Agreement.

“Total Facility B Commitments” means the aggregate of the Facility B Commitments, being $500,000,000 at the date of this Agreement.

“Transfer Certificate” means a certificate substantially in the form set out in Schedule 5 (Form of Transfer Certificate) or a recommended form of the LMA or any other form agreed between the Agent and the Company.

“Transfer Date” means, in relation to a transfer, the later of:

(a)	the proposed Transfer Date specified in the Transfer Certificate; and
(b)	the date on which the Agent executes the Transfer Certificate.

“Unpaid Sum” means any sum due and payable but unpaid by an Obligor under the Finance Documents.

“US Dollars” or “$” means the lawful currency for the time being of the United States of America.

“Utilisation” means a utilisation of a Facility.

“Utilisation Date” means the date of a Utilisation, being the date on which the relevant Loan is to be made.

“Utilisation Request” means a notice substantially in the form set out in Part I of Schedule 3 (Requests).

“VAT” means value added tax as provided for in the Value Added Tax Act 1994 and any other tax of a similar nature.

1.2	Construction
(a)	Unless a contrary indication appears, any reference in this Agreement to:

(i)	the “Agent”, the “Arranger”, any “Finance Party”, any “Guarantor”, any “Lender”, any “Obligor” or any “Party” shall be construed so as to include its successors in title, permitted assigns and permitted transferees;
(ii)	“assets” includes present and future properties, revenues and rights of every description;
(iii)	“Barclays Capital” means Barclays Capital (the investment banking division of Barclays Bank PLC);

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(iv)	a “Finance Document” or any other agreement or instrument is a reference to that Finance Document or other agreement or instrument as amended, novated, supplemented, extended, restated (however fundamentally and whether or not more onerously) or replaced and includes any change in the purpose of, any extension of or any increase in any facility or the addition of any new facility under that Finance Document or other agreement or instrument;
(v)	“indebtedness” includes any obligation (whether incurred as principal or as surety) for the payment or repayment of money, whether present or future, actual or contingent;
(vi)	a “person” includes any individual, firm, company, corporation, government, state or agency of a state or any association, trust, joint venture, consortium or partnership (whether or not having separate legal personality);
(vii)	a “regulation” includes any regulation, rule, official directive, request or guideline (whether or not having the force of law but, if not having the force of law, which is generally complied with by those to whom it is addressed) of any governmental, intergovernmental or supranational body, agency, department or regulatory, self-regulatory or other authority or organisation;
(viii)	“Société Générale Corporate & Investment Banking” means Société Générale Corporate & Investment Banking (the corporate and investment banking division of Société Générale);
(ix)	a “subsidiary” has the meaning given to it in section 736 of the Companies Act 1985 and “subsidiary undertaking” has the same meaning given to it in section 258 of the Companies Act 1985;
(x)	a provision of law is a reference to that provision as amended or re-enacted; and
(xi)	a time of day is a reference to London time.

(b)	Section, Clause and Schedule headings are for ease of reference only.
(c)	Unless a contrary indication appears, a term used in any other Finance Document or in any notice given under or in connection with any Finance Document has the same meaning in that Finance Document or notice as in this Agreement.
(d)	A Default or an Event of Default is “continuing” if it has not been remedied or waived.

1.3	Third Party Rights
	A person who is not a Party has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or to enjoy the benefit of any term of this Agreement.

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SECTION 2

THE FACILITIES

2.	THE FACILITIES
2.1	The Facilities
	Subject to the terms of this Agreement, the Lenders make available to the Borrowers:

(a)	a multicurrency revolving loan facility in an aggregate amount equal to the Total Facility A Commitments; and
(b)	a multicurrency term loan facility in an aggregate amount equal to the Total Facility B Commitments.

2.2	Finance Parties’ rights and obligations
(a)	The obligations of each Finance Party under the Finance Documents are several. Failure by a Finance Party to perform its obligations under the Finance Documents does not affect the obligations of any other Party under the Finance Documents. No Finance Party is responsible for the obligations of any other Finance Party under the Finance Documents.
(b)	The rights of each Finance Party under or in connection with the Finance Documents are separate and independent rights and any debt arising under the Finance Documents to a Finance Party from an Obligor shall be a separate and independent debt.
(c)	A Finance Party may, except as otherwise stated in the Finance Documents, separately enforce its rights under the Finance Documents.

2.3	Obligors’ agent
(a)	Each Obligor (other than the Company) by its execution of this Agreement or an Accession Letter irrevocably appoints the Company to act on its behalf as its agent in relation to the Finance Documents and irrevocably authorises:

(i)

the Company on its behalf to supply all information concerning itself contemplated by this Agreement to the Finance Parties and to give all notices and instructions (including, if relevant, any Utilisation Request), to execute on its behalf any Accession Letter, to make such agreements and to effect the relevant amendments, supplements and variations capable of being given, made or effected by any Obligor notwithstanding that they may affect the Obligor (including, without limitation, by increasing the obligations of such Obligor howsoever fundamentally, whether by increasing the liabilities guaranteed or otherwise), without further reference to or the consent of that Obligor; and

(ii)

each Finance Party to give any notice, demand or other communication to that Obligor pursuant to the Finance Documents to the Company,

	and in each case the Obligor shall be bound as though the Obligor itself had given the notices and instructions (including, without limitation, any Utilisation Request) or executed or made the agreements or effected the amendments, supplements or variations, or received the relevant notice, demand or other communication.
(b)	Every act, omission, agreement, undertaking, settlement, waiver, amendment, supplement, variation, notice or other communication given or made by the Obligors’ agent or given to the

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Obligors’ agent under any Finance Document on behalf of another Obligor or in connection with any Finance Document (whether or not known to any other Obligor and whether occurring before or after such other Obligor became an Obligor under any Finance Document) shall be binding for all purposes on that Obligor as if that Obligor had expressly made, given or concurred with it. In the event of any conflict between any notices or other communications of the Obligors’ agent and any other Obligor, those of the Obligors’ agent shall prevail.

3.	PURPOSE
3.1	Purpose
(a)	Each Borrower shall apply all amounts borrowed by it under Facility A towards general corporate purposes of the Group.
(b)	Each Borrower shall apply all amounts borrowed by it under Facility B towards bridging sources of refinancing.
3.2	Monitoring
	No Finance Party is bound to monitor or verify the application of any amount borrowed pursuant to this Agreement.
4.	CONDITIONS OF UTILISATION
4.1	Initial conditions precedent
	No Borrower may deliver a Utilisation Request unless the Agent has received all of the documents and other evidence listed in Part I of Schedule 2 (Conditions precedent) which shall be in form and substance reasonably satisfactory to the Agent. The Agent shall notify the Company and the Lenders promptly upon being so satisfied.
4.2	Further conditions precedent
(a)	The Lenders will only be obliged to comply with Clause 5.4 (Lenders’ participation) if on the date of the Utilisation Request and on the proposed Utilisation Date:

(i)	in the case of a Rollover Loan, no Event of Default is continuing or would result from the proposed Loan and, in the case of any other Loan, no Default is continuing or would result from the proposed Loan; and
(ii)	the Repeating Representations to be made by each Obligor are true in all material respects.

(b)	The Lenders will only be obliged to comply with Clause 6.3 (Change of currency) if, on the first day of an Interest Period, no Default is continuing or would result from the change of currency and the Repeating Representations to be made by each Obligor are true in all material respects.
4.3	Conditions relating to Optional Currencies
(a)	A currency will constitute an Optional Currency in relation to a Loan if it is euro or Sterling or:

(i) it is readily available in the amount required and freely convertible into the Base Currency in the Relevant Interbank Market on the Quotation Day and the Utilisation Date for that Loan; and

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(ii) it has been approved by the Agent (acting on the instructions of all the Lenders) on or prior to receipt by the Agent of the relevant Utilisation Request or Selection Notice for that Loan.

(b) If by the Specified Time the Agent has received a written request from the Company for a currency to be approved under paragraph (a)(ii) above, the Agent will notify the Lenders of that request by the Specified Time. Based on any responses received by the Agent by the Specified Time, the Agent will confirm to the Company by the Specified Time:

(i)	whether or not the Lenders have granted their approval; and
(ii)	if approval has been granted, the minimum amount (and, if required, integral multiples) for any subsequent Utilisation in that currency.

4.4	Maximum number of Loans
(a)	A Borrower may not deliver a Utilisation Request if as a result of the proposed Utilisation:

(i)	more than 14 Facility A Loans would be outstanding; or
(ii)	more than 6 Facility B Loans would be outstanding.

(b)	A Borrower may not request that a Facility B Loan be divided if, as a result of the proposed division, more than 6 Facility B Loans would be outstanding.
(c)	Any Loan made by a single Lender under Clause 6.2 (Unavailability of a currency) shall not be taken into account in this Clause 4.4.

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SECTION 3

UTILISATION

5.	UTILISATION
5.1	Delivery of a Utilisation Request
	A Borrower may utilise a Facility by delivery to the Agent of a duly completed Utilisation Request not later than the Specified Time.
5.2	Completion of a Utilisation Request
(a)	Each Utilisation Request is irrevocable and will not be regarded as having been duly completed unless:

(i)	it identifies the Facility to be utilised;
(ii)	the proposed Utilisation Date is a Business Day within the Availability Period applicable to that Facility;
(iii)	the currency and amount of the Utilisation comply with Clause 5.3 (Currency and amount);
(iv)	the proposed Interest Period complies with Clause 10 (Interest Periods); and
(v)	it specifies the account and bank (which must be in the principal financial centre of the country of the currency of the Utilisation or, in the case of euro, the principal financial centre of a Participating Member State in which banks are open for general business on that day or London or, such other financial centre as the relevant Borrower, with the consent of the Agent, may select) to which the proceeds of the Utilisation are to be credited.

(b)	Only one Loan may be requested in each Utilisation Request.
5.3	Currency and amount
(a)	The currency specified in a Utilisation Request must be the Base Currency or an Optional Currency.
(b)	The amount of the proposed Loan must be:

(i)	if the currency selected is the Base Currency, a minimum of $20,000,000 and in multiples of $1,000,000, or if less, the Available Facility;
(ii)	if the currency selected is Sterling, a minimum of £10,000,000 and in multiples of £1,000,000, or, if less the Available Facility; or
(iii)	if the currency selected is euro, a minimum of €15,000,000, and in multiples of €1,000,000, or if less, the Available Facility; or
(iv)	if the currency selected is an Optional Currency other than Sterling or euro, the minimum amount (and, if required, integral multiple) as agreed between the Agent, the Lenders and the Company provided that if no such agreement is reached between the Agent, the Lenders and the Company the minimum amount shall be the equivalent at that time of

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$20,000,000 and multiples of $2,000,000, such amount to be rounded as reasonably determined by the Agent and notified to the Company; and

(v) in any event such that its Base Currency Amount is less than or equal to the Available Facility.

5.4	Lenders’ participation
(a)	If the conditions set out in this Agreement have been met, each Lender shall make its participation in each Loan available by the Utilisation Date through its Facility Office.
(b)	The amount of each Lender’s participation in each Loan will be equal to the proportion borne by its Available Commitment to the Available Facility immediately prior to making the Loan.
(c)	The Agent shall determine the Base Currency Amount of each Loan which is to be made in an Optional Currency and shall notify each Lender of the amount, currency and the Base Currency Amount of each Loan and the amount of its participation in that Loan, in each case by the Specified Time.
5.5	Cancellation of Commitment
(a)	The Total Facility A Commitments shall be immediately cancelled at the end of the Availability Period for Facility A.
(b)	The Total Facility B Commitments shall be immediately cancelled at the end of the Availability Period for Facility B.
6.	OPTIONAL CURRENCIES
6.1	Selection of currency
(a)	A Borrower (or the Company on behalf of a Borrower) shall select the currency of a Loan:

(i)	(in the case of an initial Utilisation) in a Utilisation Request; and
(ii)	(in relation to a Facility B Loan made to it) in a Selection Notice.

(b)	If a Borrower (or the Company on behalf of a Borrower) fails to issue a Selection Notice in relation to a Facility B Loan, it shall be deemed to have requested that the Loan will remain denominated for its next Interest Period in the same currency in which it is then outstanding.
(c)	If a Borrower (or the Company on behalf of a Borrower) issues a Selection Notice requesting a change of currency and the first day of the requested Interest Period is not a Business Day for the new currency, the Agent shall promptly notify the Company, the relevant Borrower and the Lenders and the Loan will remain in the existing currency (with Interest Periods running from one Business Day until the next Business Day) until the next day which is a Business Day for both currencies, on which day the requested Interest Period will begin.
6.2	Unavailability of a currency
	If before the Specified Time on any Quotation Day:

(a)	a Lender notifies the Agent that the Optional Currency requested is not readily available to it in the amount required; or
(b)	a Lender notifies the Agent that compliance with its obligation to participate in a Loan in the proposed Optional Currency would contravene a law or regulation applicable to it,

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	the Agent will give notice to the relevant Borrower to that effect by the Specified Time on that day. In this event, any Lender that gives notice pursuant to this Clause 6.2 will be required to participate in the Loan in the Base Currency (in an amount equal to that Lender’s proportion of the Base Currency Amount or, in respect of a Rollover Loan, an amount equal to that Lender’s proportion of the Base Currency Amount of the Rollover Loan that is due to be made) and its participation will be treated as a separate Loan denominated in the Base Currency during that Interest Period.
6.3	Change of currency
(a)	If a Facility B Loan is to be denominated in different currencies during two successive Interest Periods:

(i)	if the currency for the second Interest Period is an Optional Currency, the amount of the Loan in that Optional Currency will be calculated by the Agent as the amount of that Optional Currency equal to the Base Currency Amount of the Loan at the Agent’s Spot Rate of Exchange at the Specified Time;
(ii)	if the currency for the second Interest Period is the Base Currency, the amount of the Loan will be equal to the Base Currency Amount;
(iii)	(unless the Agent and the Borrower agree otherwise in accordance with paragraph (b) below) the Borrower that has borrowed the Loan shall repay it on the last day of the first Interest Period in the currency in which it was denominated for that Interest Period; and
(iv)	(subject to Clause 4.2 (Further conditions precedent)) the Lenders shall re-advance the Loan in the new currency in accordance with Clause 6.5 (Agent’s calculations).

(b) If the Agent and the Borrower that has borrowed the Facility B Loan agree, the Agent shall:

(i)	apply the amount paid to it by the Lenders pursuant to paragraph (a)(iv) above (or so much of that amount as is necessary) in or towards purchase of an amount in the currency in which the Facility B Loan is outstanding for the first Interest Period; and
(ii)	use the amount it purchases in or towards satisfaction of the relevant Borrower’s obligations under paragraph (a)(iii) above.

(c)	If the amount purchased by the Agent pursuant to paragraph (b)(i) above is less than the amount required to be repaid by the relevant Borrower, the Agent shall promptly notify that Borrower and that Borrower shall, on the last day of the first Interest Period, pay an amount to the Agent (in the currency of the outstanding Facility B Loan for the first Interest Period) equal to the difference.
(d)	If any part of the amount paid to the Agent by the Lenders pursuant to paragraph (a)(iv) above is not needed to purchase the amount required to be repaid by the relevant Borrower, the Agent shall promptly notify that Borrower and pay that Borrower, on the last day of the first Interest Period that part of that amount (in the new currency).
6.4	Same Optional Currency during successive Interest Periods
(a)	If a Facility B Loan is to be denominated in the same Optional Currency during two successive Interest Periods, the Agent shall calculate the amount of the Facility B Loan in the Optional Currency for the second of those Interest Periods (by calculating the amount of Optional

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Currency equal to the Base Currency Amount of that Facility B Loan at the Agent’s Spot Rate of Exchange at the Specified Time) and (subject to paragraph (b) below):

(i)	if the amount calculated is less than the existing amount of that Facility B Loan in the Optional Currency during the first Interest Period, promptly notify the Borrower that has borrowed that Facility B Loan and that Borrower shall pay, on the last day of the first Interest Period, an amount equal to the difference; or
(ii)	if the amount calculated is more than the existing amount of that Facility B Loan in the Optional Currency during the first Interest Period, promptly notify each Lender and, if no Event of Default is continuing, each Lender shall, on the last day of the first Interest Period, pay its participation in an amount equal to the difference.

(b)	If the calculation made by the Agent pursuant to paragraph (a) above shows that the amount of the Facility B Loan in the Optional Currency for the second of those Interest Periods converted into the Base Currency at the Agent’s Spot Rate of Exchange at the Specified Time has increased or decreased by less than 5 per cent. compared to its Base Currency Amount (taking into account any payments made pursuant to paragraph (a) above), no notification shall be made by the Agent and no payment shall be required under paragraph (a) above.
6.5	Agent’s calculations
(a)	All calculations made by the Agent pursuant to this Clause 6 will take into account any repayment, prepayment, consolidation or division of Facility B Loans to be made on the last day of the first Interest Period.
(b)	Each Lender’s participation in a Loan will, subject to paragraph (a) above, be determined in accordance with paragraph (b) of Clause 5.4 (Lenders’ participation).

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SECTION 4

REPAYMENT, PREPAYMENT AND CANCELLATION

7.	REPAYMENT
7.1	Repayment of Facility A Loans
	Each Borrower which has drawn a Facility A Loan shall repay that Facility A Loan on the last day of its Interest Period.
7.2	Repayment of Facility B Loans
(a)	Each Borrower which has drawn a Facility B Loan shall repay that Facility B Loan on the Facility B Repayment Date.
(b)	No Borrower may reborrow any part of Facility B which is repaid.
8.	PREPAYMENT AND CANCELLATION
8.1	Illegality

If it becomes unlawful in any applicable jurisdiction for a Lender to perform any of its obligations as contemplated by this Agreement or to fund or maintain its participation in any Loan:

(a)	that Lender shall promptly notify the Agent upon becoming aware of that event;
(b)	upon the Agent notifying the Company, the Commitment of that Lender will be immediately cancelled; and
(c)	each Borrower shall repay that Lender’s participation in the Loans made to that Borrower on the last day of the Interest Period for each Loan occurring after the Agent has notified the Company or, if earlier, the date specified by the Lender in the notice delivered to the Agent (being no earlier than the last day of any applicable grace period permitted by law).

8.2	Change of control
(a)	If at any time any person or group of persons acting in concert gains control of the Company:

(i)	the Company shall promptly notify the Agent upon becoming aware of that event;
(ii)	a Lender shall not be obliged to fund a Utilisation (except for a Rollover Loan); and
(iii)	if a Lender so requires and notifies the Agent within 30 days of the Company notifying the Agent of the event, the Agent shall, by not less than 30 days’ notice to the Company, cancel the Commitment of that Lender and declare the participation of that Lender in all outstanding Loans, together with accrued interest, and all other amounts accrued under the Finance Documents immediately due and payable, whereupon the Commitment of that Lender will be cancelled and all such outstanding amounts will become immediately due and payable.

(b)	For the purpose of paragraph (a) above “control” has the meaning given to it in section 840 of the Taxes Act.
(c)	For the purpose of paragraph (a) above “acting in concert” has the meaning given to it in the City Code on Takeovers and Mergers.

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8.3	Mandatory prepayment and cancellation of Facility B from Capital Markets Fundraising
(a)	In this Clause 8.3:

“External Debt” means Financial Indebtedness of any member of the Group (other than Project Finance Indebtedness or any refinancing thereof) raised as a result of:

(i)	issuing any note, bond or other debt security (whether issued to the public or by means of private placement); or
(ii)	a loan from any person outside the Group under any loan facility with more than one lender,

in each case, with a maturity of more than one year and in an amount per transaction in excess of $50,000,000 (or its equivalent in other currencies) or in an aggregate amount in a calendar year in excess of $100,000,000 (or its equivalent in other currencies).

“Excluded Proceeds” means the proceeds of any External Debt:

(i)	raised for the specific purpose of, and applied towards, the refinancing or replacement of all or any portion of any External Debt in place prior to the date of this Agreement; or
(ii)	raised or in place prior to the date of this Agreement.

“Net Proceeds” means, in relation to External Debt, the cash proceeds received by the Company or any member of the Group, after deducting:

(i) all fees and transaction costs and expenses properly incurred in connection with:

(A)	the raising of that External Debt; or
(B)	making the transfer of such amounts to a Borrower as are required in order to comply with this Clause 8.3; and

(ii) Taxes paid or reasonably estimated by the Company to be payable as a result of the raising of that External Debt (or making the transfers required to be made to a Borrower as described in paragraph (i)(B) above).

(b)	Until such time as the Facility B Commitments and any Facility B Loans are repaid and cancelled in full, the Company shall procure that an amount equal to any Net Proceeds (other than Excluded Proceeds) is applied on the last day of the relevant Interest Period current following receipt by the relevant member of the Group of such Net Proceeds or on such earlier date following receipt as the Company may, at its option, decide, in prepayment of the outstanding Facility B Loans.
8.4	Voluntary cancellation
	The Company may, if it gives the Agent not less than 5 Business Days’ (or such shorter period as the Majority Lenders may agree) prior notice in writing, cancel the whole or any part (being a minimum amount of $40,000,000 and in multiples of $10,000,000) of an Available Facility. Any cancellation under this Clause 8.4 shall reduce the Commitments of the Lenders rateably under that Facility.
8.5	Voluntary prepayment of Facility A Loans
	A Borrower to which a Facility A Loan has been made, may, if it gives the Agent not less than 5 Business Days’ (or such shorter period as the Majority Lenders may agree) prior notice in

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	writing, prepay the whole or any part of a Facility A Loan (but, if in part, being an amount that reduces the Base Currency Amount of the Loan by a minimum amount of $40,000,000 and in multiples of $10,000,000).
8.6	Voluntary prepayment of Facility B Loans
(a)	A Borrower to which a Facility B Loan has been made may, if it gives the Agent not less than 5 Business Days’ (or such shorter period as the Majority Lenders may agree) prior notice in writing, prepay the whole or any part of any Facility B Loan (but, if in part, being an amount that reduces the Base Currency Amount of the Loan by a minimum amount of $40,000,000 and in multiples of $10,000,000).
(b)	A Facility B Loan may only be prepaid after the last day of the Availability Period (or, if earlier, the date on which the applicable Available Facility is zero).
8.7	Right of repayment and cancellation in relation to a single Lender
(a)	If:

(i)	any sum payable to any Lender by an Obligor is required to be increased under paragraph (c) of Clause 13.2 (Tax gross-up);
(ii)	any Lender claims indemnification from the Company under Clause 13.3 (Tax indemnity) or Clause 14.1 (Increased costs); or
(iii)	any Lender notifies the Agent of its Additional Cost Rate under paragraph 3 of Schedule 4 (Mandatory Cost formulae),

	the Company may, whilst (in the case of paragraphs (i) and (ii) above) the circumstance giving rise to the requirement or indemnification continues, or (in the case of paragraph (iii) above) that Additional Cost Rate is greater than zero, give the Agent notice of cancellation of the Commitment of that Lender and/or its intention to procure the repayment of that Lender’s participation in the Loans.
(b)	On receipt of a notice referred to in paragraph (a) above, the Commitment of that Lender shall immediately be reduced to zero.
(c)	On the last day of each Interest Period which ends after the Company has given notice under paragraph (a) above (or, if earlier, the date specified by the Company in that notice), each Borrower (or, as the case may be, the specified Borrower) to which a Loan is outstanding shall repay that Lender’s participation in that Loan.

8.8	Replacement of a Non-Consenting Lender or Non-Funding Lender
(a)	In this Clause 8.8:

(i) “Non-Consenting Lender” means any Lender which does not agree to a consent, waiver or amendment if:

(A)	the Company or the Agent has requested a consent under or waiver or amendment of any provision of any Finance Document;
(B)	that consent, waiver or amendment requires the agreement of all the Lenders; and
(C)	the Super-Majority Lenders have agreed to that consent, waiver or amendment.

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(ii) “Non-Funding Lender” means:

(A)	any Lender which has failed to make or participate in any Utilisation as required by this Agreement; or
(B)	any Lender which has given notice to a Borrower or the Agent that it does not intend to make or participate in any Utilisation as required by this Agreement or has repudiated its obligation to do so.

(b) If:

(i)	any Lender becomes a Non-Consenting Lender; or
(ii)	any Lender becomes a Non-Funding Lender,

	the Company may, if it gives the Agent and that Lender not less than 10 Business Days’ prior notice, arrange for the transfer of the whole (but not part only) of that Lender’s Commitment and participations in the Utilisations at par to a new or existing Lender willing to accept that transfer and acceptable to the Company and the remaining Lenders.
(c)	The replacement of a Lender pursuant to this Clause 8.8 shall be subject to the following conditions:

(i)	no Finance Party shall have any obligation to find a replacement Lender;
(ii)	any replacement of a Non-Consenting Lender must take place no later than 180 days after the earlier of (A) the date the Non-Consenting Lender notified the Agent of its refusal to agree to the relevant consent, waiver or amendment and (B) the deadline (being not less than 10 Business Days after the Lender received the request for the relevant consent, waiver or amendment) by which the Non-Consenting Lender failed to reply to that request;
(iii)	any Lender replaced pursuant to this Clause 8.8 shall not be required to refund, or to pay or surrender to any other Lender, any of the fees or other amounts received by that Lender under any Finance Document; and
(iv)	any replacement pursuant to this Clause 8.8 of a Lender which is the Agent shall not affect its role as the Agent.

8.9	Restrictions
(a)	Any notice of cancellation or prepayment given by any Party under this Clause 8 shall be irrevocable and, unless a contrary indication appears in this Agreement, shall specify the date or dates upon which the relevant cancellation or prepayment is to be made and the amount of that cancellation or prepayment.
(b)	Any prepayment under this Agreement shall be made together with accrued interest on the amount prepaid and, subject to any Break Costs, without premium or penalty.
(c)	Unless a contrary indication appears in this Agreement, any part of Facility A which is prepaid may be reborrowed in accordance with the terms of this Agreement.
(d)	No Borrower may reborrow any part of Facility B which is prepaid.

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(e)	The Borrowers shall not repay or prepay all or any part of the Loans or cancel all or any part of the Commitments except at the times and in the manner expressly provided for in this Agreement.
(f)	No amount of the Total Commitments cancelled under this Agreement may be subsequently reinstated.
(g)	If the Agent receives a notice under this Clause 8 it shall promptly forward a copy of that notice to either the Company or the affected Lender, as appropriate.

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SECTION 5

COSTS OF UTILISATION

9.	INTEREST
9.1	Calculation of interest
	The rate of interest on each Loan for each Interest Period is the percentage rate per annum which is the aggregate of the applicable:

(a)	Margin;
(b)	LIBOR or, in relation to any Loan in euro, EURIBOR; and
(c)	Mandatory Cost, if any.

9.2	Payment of interest
	The Borrower to which a Loan has been made shall pay accrued interest on that Loan on the last day of each Interest Period (and, if the Interest Period is longer than six Months, on the dates falling at six monthly intervals after the first day of the Interest Period).
9.3	Default interest
(a)	If an Obligor fails to pay any amount payable by it under a Finance Document on its due date, interest shall accrue on the overdue amount from the due date up to the date of actual payment (both before and after judgment) at a rate which, subject to paragraph (b) below, is the sum of 1 per cent. and the rate which would have been payable if the overdue amount had, during the period of non-payment, constituted a Loan in the currency of the overdue amount for successive Interest Periods, each of a duration selected by the Agent (acting reasonably). Any interest accruing under this Clause 9.3 shall be immediately payable by the Obligor on demand by the Agent.
(b)	If any overdue amount consists of all or part of a Loan which became due on a day which was not the last day of an Interest Period relating to that Loan:

(i)	the first Interest Period for that overdue amount shall have a duration equal to the unexpired portion of the current Interest Period relating to that Loan; and
(ii)	the rate of interest applying to the overdue amount during that first Interest Period shall be the sum of 1 per cent. and the rate which would have applied if the overdue amount had not become due.

(c)	Default interest (if unpaid) arising on an overdue amount will be compounded with the overdue amount at the end of each Interest Period applicable to that overdue amount but will remain immediately due and payable.
9.4	Notification of rates of interest
	The Agent shall promptly notify the Lenders and the relevant Borrower of the determination of a rate of interest under this Agreement.

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10.	INTEREST PERIODS
10.1	Selection of Interest Periods
(a)	A Borrower (or the Company on behalf of a Borrower) may select an Interest Period for a Loan in the Utilisation Request for that Loan or (if the Loan has already been borrowed) in a Selection Notice.
(b)	Each Selection Notice for a Facility B Loan is irrevocable and must be delivered to the Agent by the Borrower (or the Company on behalf of the Borrower) to which that Facility B Loan was made not later than the Specified Time.
(c)	If a Borrower (or the Company) fails to deliver a Selection Notice to the Agent in accordance with paragraph (b) above, the relevant Interest Period will be one Month.
(d)	Subject to this Clause 10, a Borrower (or the Company) may select an Interest Period of 1, 2, 3 or 6 Months or any other period agreed between the Company and the Agent (acting on the instructions of all the Lenders).
(e)	An Interest Period for a Loan shall not extend beyond the Termination Date applicable to its Facility.
(f)	A Facility A Loan has one Interest Period only.
(g)	Each Interest Period for a Facility B Loan shall start on the Utilisation Date or (if already made) on the last day of its preceding Interest Period.
10.2	Non-Business Days
	If an Interest Period would otherwise end on a day which is not a Business Day, that Interest Period will instead end on the next Business Day in that calendar month (if there is one) or the preceding Business Day (if there is not).
10.3	Consolidation and division of Facility B Loans
(a)	Subject to paragraph (b) below, if two or more Interest Periods:

(i)	relate to Facility B Loans in the same currency;
(ii)	end on the same date; and
(iii)	are made to the same Borrower,

those Facility B Loans will, unless that Borrower (or the Company on its behalf) specifies to the contrary in the Selection Notice for the next Interest Period, be consolidated into, and treated as, a single Facility B Loan on the last day of the Interest Period.

(b)

Subject to Clause 4.4 (Maximum number of Loans) and Clause 5.3 (Currency and amount), if a Borrower (or the Company on its behalf) requests in a Selection Notice that a Facility B Loan be divided into two or more Facility B Loans that Facility B Loan will, on the last day of its Interest Period, be so divided with Base Currency Amounts specified in that Selection Notice, being an aggregate Base Currency Amount equal to the Base Currency Amount of the Facility B Loan immediately before its division.

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11.	CHANGES TO THE CALCULATION OF INTEREST
11.1	Absence of quotations
	Subject to Clause 11.2 (Market disruption), if LIBOR or, if applicable, EURIBOR is to be determined by reference to the Reference Banks but a Reference Bank does not supply a quotation by the Specified Time on the Quotation Day, the applicable LIBOR or EURIBOR shall be determined on the basis of the quotations of the remaining Reference Banks.
11.2	Market disruption
(a)	If a Market Disruption Event occurs in relation to a Loan for any Interest Period, then the rate of interest on each Lender’s share of that Loan for the Interest Period shall be the rate per annum which is the sum of:

(i)	the applicable Margin;
(ii)	the rate notified to the Agent by that Lender as soon as practicable and in any event before interest is due to be paid in respect of that Interest Period, to be that which expresses as a percentage rate per annum the cost to that Lender of funding its participation in that Loan from whatever source it may reasonably select; and
(iii)	the Mandatory Cost, if any, applicable to that Lender’s participation in the Loan.

(b) In this Agreement “Market Disruption Event” means:

(i)	at or about noon on the Quotation Day for the relevant Interest Period the Screen Rate is not available and none or only one of the Reference Banks supplies a rate to the Agent to determine LIBOR or, EURIBOR for the relevant currency and Interest Period; or
(ii)	before close of business in London on the Quotation Day for the relevant Interest Period, the Agent receives notifications from a Lender or Lenders (whose participations in a Loan exceed 35 per cent. of that Loan) that the cost to it of obtaining matching deposits in the Relevant Interbank Market would be in excess of LIBOR or, if applicable, EURIBOR.

11.3 Alternative basis of interest or funding

(a)	If a Market Disruption Event occurs and the Agent or the Company so requires, the Agent and the Company shall enter into negotiations (for a period of not more than thirty days) with a view to agreeing a substitute basis for determining the rate of interest.
(b)	Any alternative basis agreed pursuant to paragraph (a) above shall, with the prior consent of all the Lenders and the Company, be binding on all Parties.
11.4	Break Costs
(a)	Each Borrower shall, within five Business Days of a demand by a Finance Party, pay to that Finance Party its Break Costs attributable to all or any part of a Loan or Unpaid Sum being paid by that Borrower on a day other than the last day of an Interest Period for that Loan or Unpaid Sum.
(b)	Each Lender shall, together with its demand provide a certificate confirming the amount and basis of calculation of its Break Costs for any Interest Period in which they accrue.

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12.	FEES
12.1	Facility A Commitment fee
(a)	The Company shall pay to the Agent (for the account of each Lender) a fee in the Base Currency computed on a day to day basis at a percentage rate per annum equal to 35 per cent. of the relevant Margin which would apply to a Facility A Loan drawn on that day on that Lender’s Available Commitment under Facility A for the Availability Period applicable to Facility A.
(b)	The accrued commitment fee is payable in relation to Facility A, on the last day of each successive period of three Months which ends during the Availability Period applicable to Facility A, on the last day of the Availability Period applicable to Facility A and, if cancelled in full, on the cancelled amount of the relevant Lender’s Available Commitment at the time the cancellation is effective.
12.2	MLA fee
	The Company shall pay, or procure that the same is paid, to the Arranger (for its own account) a fee in the amount and at the times agreed in a Fee Letter.
12.3	Participation fee
	The Company shall pay, or shall procure that the same is paid, to the Agent (for the account of each Lender) a fee in the amount and at the times agreed in a Fee Letter.
12.4	Agency fee
	The Company shall pay, or procure that the same is paid, to the Agent (for its own account) an agency fee in the amount and at the times agreed in a Fee Letter.

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SECTION 6

ADDITIONAL PAYMENT OBLIGATIONS

13.	TAX GROSS-UP AND INDEMNITIES
13.1	Definitions
(a)	In this Agreement:
	“Protected Party” means a Finance Party which is or will be subject to any liability, or required to make any payment, for or on account of Tax in relation to a sum received or receivable (or any sum deemed for the purposes of Tax to be received or receivable) under a Finance Document.
	“Qualifying Lender” means:

(i) a Lender (other than a Lender within sub-paragraph (ii) below) which is beneficially entitled to interest payable to that Lender in respect of an advance under a Finance Document and is:

(A) a Lender:

1.	which is a bank (as defined for the purpose of section 879 of the Income Tax Act) making an advance under a Finance Document; or
2.	in respect of an advance made under a Finance Document by a person that was a bank (as defined for the purpose of section 879 of the Income Tax Act) at the time that that advance was made,

and which is within the charge to United Kingdom corporation tax as respects any payments of interest made in respect of that advance; or

(B) a Lender which is:

1.	a company resident in the United Kingdom for United Kingdom tax purposes;
2.	a partnership each member of which is:

(a)	a company so resident in the United Kingdom; or
(b)	a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment and which brings into account in computing its chargeable profits (for the purposes of section 11(2) of the Taxes Act) the whole of any share of interest payable in respect of that advance that falls to it by reason of sections 114 and 115 of the Taxes Act; or

3. a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment and which brings into account interest payable in respect of that advance in computing the chargeable profits (for the purposes of section 11(2) of the Taxes Act) of that company; or

(C) a Treaty Lender; or

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(ii) a building society (as defined for the purposes of section 880 of the Income Tax Act) making an advance under a Finance Document.

“Tax Confirmation” means a confirmation by a Lender that the person beneficially entitled to interest payable to that Lender in respect of an advance under a Finance Document is either:

(i)	a company resident in the United Kingdom for United Kingdom tax purposes; or
(ii)	a partnership each member of which is:

(A)	a company so resident in the United Kingdom; or
(B)	a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment and which brings into account in computing its chargeable profits (for the purposes of section 11(2) of the Taxes Act) the whole of any share of interest payable in respect of that advance that falls to it by reason of sections 114 and 115 of the Taxes Act; or

(iii) a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment and which brings into account interest payable in respect of that advance in computing the chargeable profits (for the purposes of section 11(2) of the Taxes Act) of that company.

“Tax Credit” means a credit against, relief or remission for, or repayment of any Tax.

“Tax Deduction” means a deduction or withholding for or on account of Tax from a payment under a Finance Document.

“Tax Payment” means the amount by which a payment made by an Obligor to a Finance Party is increased under Clause 13.2 (Tax gross-up) or a payment under Clause 13.3 (Tax indemnity).

“Treaty Lender” means a Lender which:

(i)	is treated as a resident of a Treaty State for the purposes of the Treaty;
(ii)	does not carry on a business in the United Kingdom through a permanent establishment with which that Lender’s participation in the Loans is effectively connected; and
(iii)	fulfils any conditions which must be fulfilled under the double taxation agreement for residents of that Treaty State to obtain exemption from United Kingdom taxation on interest (subject to the completion of any necessary procedural formalities).

	“Treaty State” means a jurisdiction having a double taxation agreement (a “Treaty”) with the United Kingdom which makes provision for full exemption from tax imposed by the United Kingdom on interest.
	“UK Non-Bank Lender” means where a Lender becomes a Party after the day on which this Agreement is entered into, a Lender which gives a Tax Confirmation in the Transfer Certificate which it executes on becoming a Party.
(b)	Unless a contrary indication appears, in this Clause 13 a reference to “determines” or “determined” means a determination made in the absolute discretion of the person making the determination.

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13.2	Tax gross-up
(a)	Each Obligor shall make all payments to be made by it without any Tax Deduction, unless a Tax Deduction is required by law.
(b)	The Company shall promptly upon becoming aware that an Obligor must make a Tax Deduction (or that there is any change in the rate or the basis of a Tax Deduction) notify the Agent accordingly. Similarly, a Lender shall promptly notify the Agent on becoming so aware in respect of a payment payable to that Lender. If the Agent receives such notification from a Lender it shall promptly notify the Company and that Obligor.
(c)	If a Tax Deduction is required by law to be made by an Obligor, the amount of the payment due from that Obligor shall be increased to an amount which (after making any Tax Deduction) leaves an amount equal to the payment which would have been due if no Tax Deduction had been required.
(d)	An Obligor is not required to make an increased payment to a Lender under paragraph (c) above for a Tax Deduction in respect of tax imposed by the United Kingdom from a payment of interest on a Loan, if on the date on which the payment falls due:

(i)

the payment could have been made to the relevant Lender without a Tax Deduction if it was a Qualifying Lender, but on that date that Lender is not or has ceased to be a Qualifying Lender other than as a result of any change after the date it became a Lender under this Agreement in (or in the interpretation, administration, or application of) any law or Treaty, or any published practice or concession of any relevant taxing authority; or

(ii)

(A)	the relevant Lender is a Qualifying Lender solely under sub-paragraph (i)(B) of the definition of Qualifying Lender;
(B)	an officer of HM Revenue & Customs has given (and not revoked) a direction (a “Direction”) under section 931 of the Income Tax Act (as that provision has effect on the date on which the relevant Lender became a Party) which relates to that payment and that Lender has received from that Obligor or the Company a certified copy of that Direction; and
(C)	the payment could have been made to the Lender without any Tax Deduction in the absence of that Direction; or

(iii)	the relevant Lender is a Qualifying Lender solely under sub-paragraph (i)(B) of the definition of Qualifying Lender and it has not, other than by reason of any change after the date of this Agreement in (or in the interpretation, administration or application of) any law, or any published practice or concession of any relevant taxing authority, given a Tax Confirmation to the Company;
(iv)	the relevant Lender is a Treaty Lender and the Obligor making the payment is able to demonstrate that the payment could have been made to the Lender without the Tax Deduction had that Lender complied with its obligations under paragraph (g) below; or
(v)	the Tax Deduction is required as a result of a direction under regulation 9(b) of SI 1970/488 and the application of regulation 9(b) to that Lender does not result from a

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change after it became a Lender in (or the interpretation, administration or application of) any law or Treaty, or any published practice or concession of any relevant taxing authority.

(e)	If an Obligor is required to make a Tax Deduction, that Obligor shall make that Tax Deduction and any payment required in connection with that Tax Deduction within the time allowed and in the minimum amount required by law.
(f)	Within thirty days of making either a Tax Deduction or any payment required in connection with that Tax Deduction, the Obligor making that Tax Deduction shall deliver to the Agent for the Finance Party entitled to the payment evidence reasonably satisfactory to that Finance Party that the Tax Deduction has been made or (as applicable) any appropriate payment paid to the relevant taxing authority.
(g)	A Treaty Lender and each Obligor which makes a payment to which that Treaty Lender is entitled shall co-operate in promptly completing any procedural formalities (including completing and submitting appropriate documents to the applicable taxation authorities) necessary for that Obligor to obtain authorisation to make that payment without a Tax Deduction.
(h)	A UK Non-Bank Lender shall promptly notify the Company and the Agent if there is any change in the position from that set out in the Tax Confirmation.
(i)	Each Lender severally warrants to the Company that it is a Qualifying Lender on the date it becomes a Party to this Agreement. If at any time after this Agreement is entered into any Lender becomes aware that it is not and will not or will cease to be a Qualifying Lender, it shall promptly notify the Agent and the Company.
13.3	Tax indemnity
(a)	The Borrowers shall (within five Business Days of demand by the Agent) pay to a Protected Party an amount equal to the loss, liability or cost which that Protected Party determines has been (directly or indirectly) suffered for or on account of Tax by that Protected Party in respect of a Finance Document.
(b)	Paragraph (a) above shall not apply:

(i) with respect to any Tax assessed on a Finance Party:

(A)	under the law of the jurisdiction in which that Finance Party is incorporated or, if different, the jurisdiction (or jurisdictions) in which that Finance Party is treated as resident for tax purposes; or
(B)	under the law of the jurisdiction in which that Finance Party’s Facility Office is located in respect of amounts received or receivable in that jurisdiction,

if that Tax is imposed on or calculated by reference to the net income received or receivable (but not any sum deemed to be received or receivable) by that Finance Party;

(ii) to the extent a loss, liability or cost:

(A) is compensated for by an increased payment under Clause 13.2 (Tax gross-up); or

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(B) would have been compensated for by an increased payment under Clause 13.2 (Tax gross-up) but was not so compensated solely because one of the exclusions in paragraph (d) of Clause 13.2 (Tax gross-up) applied; or

(iii) to the extent that such loss, liability or cost has not been notified to the Company by the relevant Finance Party within 2 months of such Finance Party becoming aware of the existence of the same.

(c)	A Protected Party making, or intending to make, a claim under paragraph (a) above shall promptly notify the Agent of the event which will give, or has given, rise to the claim, following which the Agent shall promptly notify the Company.
(d)	A Protected Party shall, on receiving a payment from an Obligor under this Clause 13.3, notify the Agent.
13.4	Tax Credit
	If an Obligor makes a Tax Payment and the relevant Finance Party determines that:

(a)	a Tax Credit is attributable either to an increased payment of which that Tax Payment forms part or to that Tax Payment; and
(b)	that Finance Party has obtained, utilised and retained that Tax Credit,

	the Finance Party shall pay an amount to the Obligor which that Finance Party determines will leave it (after that payment) in no better and no worse position in respect of its worldwide tax liabilities than it would have been in had the Tax Payment not been required to be made by the Obligor.
13.5	Stamp taxes
	The Borrowers shall pay and, within five Business Days of demand, indemnify each Finance Party against any cost, loss or liability that Finance Party incurs in relation to all stamp duty, registration and other similar Taxes payable in respect of any Finance Document.
13.6	Value added tax
(a)	All amounts set out, or expressed to be payable under a Finance Document by any Party to a Finance Party which (in whole or part) constitute the consideration for VAT purposes shall be deemed to be exclusive of any VAT which is chargeable on such supply, and accordingly, subject to paragraph (c) below, if VAT is chargeable on any supply made by any Finance Party to any Party under a Finance Document, that Party shall pay to the Finance Party (in addition to and at the same time as paying the consideration) an amount equal to the amount of the VAT (and such Finance Party shall promptly provide an appropriate VAT invoice to such Party).
(b)	If VAT is chargeable on any supply made by any Finance Party (the “Supplier”) to any other Finance Party (the “Recipient”) under a Finance Document, and any Party (the “Relevant Party”) is required by the terms of any Finance Document to pay an amount equal to the consideration for such supply to the Supplier (rather than being required to reimburse the Recipient in respect of that consideration), such Party shall also pay to the Supplier (in addition to and at the same time as paying such amount) an amount equal to the amount of such VAT. The Recipient will promptly pay to the Relevant Party an amount equal to any credit or

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	repayment from the relevant tax authority which it reasonably determines relates to the VAT chargeable on that supply.
(c)	Where a Finance Document requires any Party to reimburse a Finance Party for any costs or expenses, that Party shall also at the same time pay and indemnify the Finance Party against all VAT incurred by the Finance Party in respect of the costs or expenses save to the extent that neither the Finance Party nor any other member of any group of which it is a member for VAT purposes is entitled to repayment or credit in respect of such VAT.
13.7	PTR Scheme
(a)	Each Lender:

(i)	irrevocably appoints Six Continents Limited (“SCL”) (insofar as it is permitted to act as a syndicate manager by HM Revenue & Customs) to act as syndicate manager under, and authorises SCL to operate, and take any action necessary or desirable under, the PTR Scheme in connection with the Facilities;
(ii)	shall co-operate with SCL in completing any procedural formalities necessary under the PTR Scheme, and shall promptly supply to SCL such information as SCL may request in connection with the operation of the PTR Scheme;
(iii)	without limiting the liability of any Borrower under this Agreement, shall, within 5 Business Days of demand, indemnify SCL for any liability or loss incurred by SCL as a result of SCL acting as syndicate manager under the PTR Scheme in connection with the Lender’s participation in any Loan (except to the extent that the liability or loss arises directly from SCL’s gross negligence or wilful misconduct); and
(iv)	shall, within 5 Business Days of demand, indemnify each Borrower for any Tax which such Borrower becomes liable to pay in respect of any payments made to such Lender arising as a result of any incorrect information supplied by such Lender under paragraph (ii) above which results in a provisional authority issued by HM Revenue & Customs under the PTR Scheme being withdrawn.

(b) Each Borrower acknowledges that it is fully aware of its contingent obligations under the PTR Scheme and shall:

(i)	promptly supply to SCL such information as SCL may request in connection with the operation of the PTR Scheme, save that SCL shall have no such obligation to the extent it is a Borrower; and
(ii)	act in accordance with any provisional notice issued by HM Revenue & Customs under the PTR Scheme.

(c) If SCL is not permitted by HM Revenue & Customs to act as syndicate manager under and/or operate the PTR Scheme in accordance with paragraph (a) above:

(i) each Lender irrevocably appoints the Agent to act as syndicate manager and to operate the PTR Scheme and paragraphs (a) and (b) above shall apply to the Agent and shall be construed as if references in those paragraphs to “SCL” were references to “the Agent”; and

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(ii) the Agent agrees to provide, as soon as reasonably practicable, a copy of any provisional authority issued to it under the PTR Scheme in connection with any Loan to those Borrowers specified in such provisional authority.

(d) All Parties acknowledge that each of SCL and the Agent:

(i)	is entitled to rely completely upon information provided to it in connection with paragraphs (a) or (b) above;
(ii)	is not obliged to undertake any enquiry into the accuracy of such information, nor into the status of the Lender or, as the case may be, Borrower providing such information; and
(iii)	shall have no liability to any person for the accuracy of any information it submits in connection with paragraph (a)(i) above.

(e)	All Parties agree to the appointment of SCL as syndicate manager for the purposes of the PTR Scheme.
(f)	In this Clause “PTR Scheme” means the Provisional Treaty Relief scheme as described in HM Revenue & Customs (formerly the Inland Revenue) Guidelines dated January 2003 and administered by HM Revenue & Customs.
14.	INCREASED COSTS
14.1	Increased costs
(a)	Subject to Clause 14.3 (Exceptions) the Company shall, within five Business Days of a demand by the Agent, pay for the account of a Finance Party the amount of any Increased Costs incurred by that Finance Party or any of its Affiliates as a result of (i) the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation or (ii) compliance with any law or regulation made after the date of this Agreement.
(b)	In this Agreement “Increased Costs” means:

(i)	a reduction in the rate of return from the Facility or on a Finance Party’s (or its Affiliate’s) overall capital;
(ii)	an additional or increased cost; or
(iii)	a reduction of any amount due and payable under any Finance Document,

	which is incurred or suffered by a Finance Party or any of its Affiliates to the extent that it is attributable to that Finance Party having entered into its Commitment or funding or performing its obligations under any Finance Document.
14.2	Increased cost claims
(a)	A Finance Party intending to make a claim pursuant to Clause 14.1 (Increased costs) shall notify the Agent of the event giving rise to the claim, following which the Agent shall promptly notify the Company.
(b)	Each Finance Party shall, as soon as practicable after a demand by the Agent, provide a certificate confirming the amount and reasonable details of the calculation of its Increased Costs.
14.3	Exceptions
(a)	Clause 14.1 (Increased costs) does not apply to the extent any Increased Cost is:

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(i)	attributable to a Tax Deduction required by law to be made by an Obligor;
(ii)	compensated for by Clause 13.3 (Tax indemnity) (or would have been compensated for under Clause 13.3 (Tax indemnity) but was not so compensated solely because any of the exclusions in paragraph (b) of Clause 13.3 (Tax indemnity) applied);
(iii)	compensated for by the payment of the Mandatory Cost;
(iv)	attributable to the negligence or wilful breach by the relevant Finance Party or its Affiliates of any law or regulation; or
(v)	attributable to the implementation or application of or compliance with the “International Convergence of Capital Measurement and Capital Standards, a Revised Framework” published by the Basel Committee on Banking Supervision in June 2004 in the form existing on the date of this Agreement (“Basel II”) or any other law or regulation which implements Basel II (whether such implementation, application or compliance is by a government, regulator, Finance Party or any of its Affiliates).

(b)	In this Clause 14.3, a reference to a “Tax Deduction” has the same meaning given to the term in Clause 13.1 (Definitions).
15.	OTHER INDEMNITIES
15.1	Currency indemnity
(a)	If any sum due from an Obligor under the Finance Documents (a “Sum”), or any order, judgment or award given or made in relation to a Sum, has to be converted from the currency (the “First Currency”) in which that Sum is payable into another currency (the “Second Currency”) for the purpose of:

(i)	making or filing a claim or proof against that Obligor;
(ii)	obtaining or enforcing an order, judgment or award in relation to any litigation or arbitration proceedings,

	that Obligor shall as an independent obligation, within five Business Days of demand, indemnify each Finance Party to whom that Sum is due against any cost, loss or liability arising out of or as a result of the conversion including any discrepancy between (A) the rate of exchange used to convert that Sum from the First Currency into the Second Currency and (B) the rate or rates of exchange available to that person at the time of its receipt of that Sum.
(b)	Each Obligor waives any right it may have in any jurisdiction to pay any amount under the Finance Documents in a currency or currency unit other than that in which it is expressed to be payable.
15.2	Other indemnities
	The Company shall (or shall procure that an Obligor will), within five Business Days of demand, indemnify each Finance Party against any cost, loss or liability incurred by that Finance Party as a result of:

(a) the occurrence of any Event of Default;

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(b)	a failure by an Obligor to pay any amount due under a Finance Document on its due date, including without limitation, any cost, loss or liability arising as a result of Clause 28 (Sharing among the Finance Parties);
(c)	funding, or making arrangements to fund, its participation in a Loan requested by a Borrower in a Utilisation Request but not made by reason of the operation of any one or more of the provisions of this Agreement (other than by reason of default or negligence by that Finance Party alone); or
(d)	a Loan (or part of a Loan) not being prepaid in accordance with a notice of prepayment given by a Borrower or the Company.

15.3	Indemnity to the Agent
	The Company shall promptly indemnify the Agent against any cost, loss or liability incurred by the Agent (acting reasonably) as a result of:

(a)	investigating any event which it reasonably believes is an Event of Default; or
(b)	entering into or performing any foreign exchange contract for the purpose of paragraph (b) of Clause 6.3 (Change of currency); or
(c)	acting or relying on any notice, request or instruction made by an Obligor which it reasonably believes to be genuine, correct and appropriately authorised.

16.	MITIGATION BY THE LENDERS
16.1	Mitigation
(a)	Each Finance Party shall, in consultation with the Company, take all reasonable steps to mitigate any circumstances which arise and which would result in any amount becoming payable under or pursuant to, or cancelled pursuant to, any of Clause 8.1 (Illegality), Clause 13 (Tax gross-up and indemnities), Clause 14 (Increased costs) or paragraph 3 of Schedule 4 (Mandatory Cost formulae) including (but not limited to) transferring its rights and obligations under the Finance Documents to another Affiliate or Facility Office.
(b)	Paragraph (a) above does not in any way limit the obligations of any Obligor under the Finance Documents.
16.2	Limitation of liability
(a)	The Company shall indemnify each Finance Party for all costs and expenses reasonably incurred by that Finance Party as a result of steps taken by it under Clause 16.1 (Mitigation).
(b)	A Finance Party is not obliged to take any steps under Clause 16.1 (Mitigation) if, in the opinion of that Finance Party (acting reasonably), to do so might be prejudicial to it.
17.	COSTS AND EXPENSES
17.1	Transaction expenses
	The Company shall promptly on demand pay the Agent and the Arranger the amount of all reasonable costs and expenses (including legal fees) reasonably incurred by any of them (subject to a maximum in respect of legal fees as agreed with the Company) in connection with the negotiation, preparation, printing and execution of:

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(a)	this Agreement and any other documents referred to in this Agreement; and
(b)	any other Finance Documents executed after the date of this Agreement.

17.2	Amendment costs
	If (a) an Obligor requests an amendment, waiver or consent or (b) an amendment is required pursuant to Clause 29.9 (Change of currency), the Company shall, within five Business Days of demand, reimburse the Agent for the amount of all reasonable costs and expenses (including legal fees) reasonably incurred by the Agent in evaluating, negotiating or complying with that request.
17.3	Enforcement costs
	The Company shall, within five Business Days of demand, pay to each Finance Party the amount of all costs and expenses (including legal fees) incurred by that Finance Party in connection with the enforcement of, or the preservation of any rights under, any Finance Document.

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SECTION 7

GUARANTEE

18.	GUARANTEE AND INDEMNITY
18.1	Guarantee and indemnity
	Each Guarantor irrevocably and unconditionally jointly and severally:

(a)	guarantees to each Finance Party punctual performance by each Borrower of all that Borrower’s payment obligations under the Finance Documents;
(b)	undertakes with each Finance Party that whenever a Borrower does not pay any amount when due under or in connection with any Finance Document, that Guarantor shall immediately on demand pay that amount as if it was the principal obligor; and
(c)	indemnifies each Finance Party immediately on demand against any cost, loss or liability suffered by that Finance Party if any payment obligation guaranteed by it is or becomes unenforceable, invalid or illegal. The amount of the cost, loss or liability shall be equal to the amount which that Finance Party would otherwise have been entitled to recover.

18.2	Continuing guarantee
	This guarantee is a continuing guarantee and will extend to the ultimate balance of sums payable by any Obligor under the Finance Documents, regardless of any intermediate payment or discharge in whole or in part.
18.3	Reinstatement
	If any payment by an Obligor or any discharge given by a Finance Party (whether in respect of the obligations of any Obligor or any security for those obligations or otherwise) is avoided or reduced as a result of insolvency or any similar event:

(a)	the liability of each Obligor shall continue as if the payment, discharge, avoidance or reduction had not occurred; and
(b)	each Finance Party shall be entitled to recover the value or amount of that security or payment from each Obligor, as if the payment, discharge, avoidance or reduction had not occurred.

18.4	Waiver of defences
	The obligations of each Guarantor under this Clause 18 will not be affected by an act, omission, matter or thing which, but for this Clause, would reduce, release or prejudice any of its obligations under this Clause 18 (without limitation and whether or not known to it or any Finance Party) including:

(a)	any time, waiver or consent granted to, or composition with, any Obligor or other person;
(b)	the release of any other Obligor or any other person under the terms of any composition or arrangement with any creditor of any member of the Group;
(c)	the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect, take up or enforce, any rights against, or security over assets of, any Obligor

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	or other person or any non-presentation or non-observance of any formality or other requirement in respect of any instrument or any failure to realise the full value of any security;
(d)	any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of an Obligor or any other person;
(e)	any amendment (however fundamental) or replacement of a Finance Document or any other document or security;
(f)	any unenforceability, illegality or invalidity of any obligation of any person under any Finance Document or any other document or security; or
(g)	any insolvency or similar proceedings.

18.5	Immediate recourse
	Each Guarantor waives any right it may have of first requiring any Finance Party (or any trustee or agent on its behalf) to proceed against or enforce any other rights or security or claim payment from any person before claiming from that Guarantor under this Clause 18. This waiver applies irrespective of any law or any provision of a Finance Document to the contrary.
18.6	Appropriations
	Until all amounts which may be or become payable by the Obligors under or in connection with the Finance Documents have been irrevocably paid in full, while a Default is continuing, each Finance Party (or any trustee or agent on its behalf) may:

(a)	refrain from applying or enforcing any other moneys, security or rights held or received by that Finance Party (or any trustee or agent on its behalf) in respect of those amounts, or apply and enforce the same in such manner and order as it sees fit (whether against those amounts or otherwise) and no Guarantor shall be entitled to the benefit of the same; and
(b)	hold in an interest-bearing suspense account any moneys received from any Guarantor or on account of any Guarantor’s liability under this Clause 18.

18.7	Deferral of Guarantors’ rights
	Until all amounts which may be or become payable by the Obligors under or in connection with the Finance Documents have been irrevocably paid in full and unless the Agent otherwise directs, no Guarantor will exercise any rights which it may have by reason of performance by it of its obligations under the Finance Documents:

(a)	to be indemnified by an Obligor;
(b)	to claim any contribution from any other guarantor of any Obligor’s obligations under the Finance Documents; and/or
(c)	to take the benefit (in whole or in part and whether by way of subrogation or otherwise) of any rights of the Finance Parties under the Finance Documents or of any other guarantee or security taken pursuant to, or in connection with, the Finance Documents by any Finance Party.

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18.8	Release of Guarantors’ right of contribution
	If any Guarantor (a “Retiring Guarantor”) ceases to be a Guarantor in accordance with the terms of the Finance Documents for the purpose of any sale or other disposal of that Retiring Guarantor then on the date such Retiring Guarantor ceases to be a Guarantor:

(a)

that Retiring Guarantor is released by each other Guarantor from any liability (whether past, present or future and whether actual or contingent) to make a contribution to any other Guarantor arising by reason of the performance by any other Guarantor of its obligations under the Finance Documents; and

(b)

each other Guarantor waives any rights it may have by reason of the performance of its obligations under the Finance Documents to take the benefit (in whole or in part and whether by way of subrogation or otherwise) of any rights of the Finance Parties under any Finance Document or of any other security taken pursuant to, or in connection with, any Finance Document where such rights or security are granted by or in relation to the assets of the Retiring Guarantor.

18.9	Additional security
	This guarantee is in addition to and is not in any way prejudiced by any other guarantee or security now or subsequently held by any Finance Party.

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SECTION 8

REPRESENTATIONS, UNDERTAKINGS AND EVENTS OF DEFAULT

19.	REPRESENTATIONS
	Each Obligor makes the representations and warranties set out in this Clause 19 to each Finance Party, on the date of this Agreement.
19.1	Status
(a)	It is a corporation, duly incorporated and validly existing under the law of its jurisdiction of incorporation.
(b)	It and each of its Material Subsidiaries has the power to own its assets and carry on its business as it is being conducted.
19.2	Binding obligations
	The obligations expressed to be assumed by it in each Finance Document are subject to any general principles of law limiting its obligations which are specifically referred to in any legal opinion delivered pursuant to Clause 4 (Conditions of Utilisation) or Clause 25 (Changes to the Obligors) legal, valid, binding and enforceable obligations.
19.3	Non-conflict with other obligations
	The entry into and performance by it of, and the transactions contemplated by, the Finance Documents do not and will not conflict with:

(a)	any law or regulation applicable to it;
(b)	its constitutional documents; or
(c)	any agreement or instrument binding upon it or any of its Subsidiaries or any of its or any of its Subsidiaries’ assets breach of which would have a Material Adverse Effect.

19.4	Power and authority
	It has the power to enter into, perform and deliver, and has taken all necessary action to authorise its entry into, performance and delivery of, the Finance Documents to which it is a party and the transactions contemplated by those Finance Documents.
19.5	Validity and admissibility in evidence
	All Authorisations required:

(a)	to enable it lawfully to enter into, exercise its rights and comply with its obligations in the Finance Documents to which it is a party; and
(b)	to make the Finance Documents to which it is a party admissible in evidence in its jurisdiction of incorporation,

have been obtained or effected and are in full force and effect (or, in each case, will be when required).

19.6	No default
(a)	No Event of Default is continuing or could reasonably be expected to result from the making of any Utilisation.

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(b)	No other event or circumstance is outstanding which constitutes a default under any other agreement or instrument which is binding on it or any of its Subsidiaries or to which its (or any of its Subsidiaries’) assets are subject which has or could reasonably be expected to have a Material Adverse Effect.
19.7	Financial statements
(a)	The Original Financial Statements were prepared in accordance with IFRS consistently applied.
(b)	The Original Financial Statements fairly represent the consolidated financial condition and operations of the Group during the relevant financial period.
(c)	There has been no material adverse change in the business or financial condition of the Group since 31 December 2007.
19.8	Pari passu ranking
	Its payment obligations under the Finance Documents rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors, except for obligations mandatorily preferred by law applying to companies generally.
19.9	No proceedings pending or threatened
	No litigation, arbitration or administrative proceedings of or before any court, arbitral body or agency which are reasonably likely to be adversely determined and, if adversely determined, could be reasonably likely to have a Material Adverse Effect have (to the best of its knowledge and belief) been started or threatened against it or any of its Subsidiaries.
19.10	No misleading information
(a)	Any written factual information provided by or on behalf of any member of the Group for the purposes of the entry into of this Agreement by a Finance Party, was true and accurate in all material respects as at the date it was provided or as at the date (if any) at which it is stated.
(b)	Nothing has occurred since the date of delivery of, or been omitted from, the factual information referred to in paragraph (a) above and no information has been given or withheld that results in the information referred to in paragraph (a) being untrue or misleading in any material respect.
(c)	The representations and warranties in this Clause 19.10 are made by the Company only.
19.11	Repetition
	The Repeating Representations are deemed to be made by each Obligor by reference to the facts and circumstances then existing on:

(a)	the date of each Utilisation Request and the first day of each Interest Period; and
(b)	in the case of an Additional Obligor, the day on which the company becomes (or it is proposed that the company becomes) an Additional Obligor.

20.	INFORMATION UNDERTAKINGS
	The undertakings in this Clause 20 remain in force from the date of this Agreement for so long as any amount is outstanding under the Finance Documents or any Commitment is in force.
20.1	Financial statements
	The Company shall supply to the Agent in sufficient copies for all the Lenders:

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(a) as soon as the same become available, but in any event within 120 days after the end of each of its financial years:

(i)	its audited consolidated financial statements for that financial year; and
(ii)	the financial statements of each Obligor for that financial year (which shall be audited if that Obligor produces audited financial statements); and

(b) as soon as the same become available, but in any event within 90 days after the end of the first half of each of its financial years, its consolidated financial statements for that financial half year.

20.2	Compliance Certificate
(a)	The Company shall supply to the Agent, with each set of financial statements delivered pursuant to paragraph (a)(i) or (b) of Clause 20.1 (Financial statements), a Compliance Certificate setting out:

(i)	(in reasonable detail) computations as to compliance with Clause 21 (Financial covenants); and
(ii)	an updated list of Material Subsidiaries,

in each case, as at the date at which those financial statements were drawn up.

(b)	Each Compliance Certificate shall be signed by a director or an authorised signatory on behalf of the Company.
20.3	Margin Certificate
(a)	The Company shall supply to the Agent a Margin Certificate within 80 days of each Quarter Date setting out a computation of the Margin Ratio.
(b)	Each Margin Certificate shall be signed by a director on behalf of the Company.
20.4	Requirements as to financial statements
(a)	Each set of financial statements delivered by the Company pursuant to paragraph (a) of Clause 20.1 (Financial statements) shall be certified by an authorised signatory on behalf of the relevant company as fairly representing its (or, as the case may be, its consolidated) financial condition and operations as at the end of and for the period in relation to which those financial statements were drawn up.
(b)	The Company shall procure that each set of financial statements of the Group delivered pursuant to Clause 20.1 (Financial statements) is prepared using IFRS and it shall deliver to the Agent:

(i)	sufficient information, in form and substance as may be reasonably required by the Agent, to enable the Lenders to determine whether Clause 21 (Financial covenants) has been complied with and make an accurate comparison between the financial position indicated in those financial statements and the Original Financial Statements; and
(ii)	a description of any change necessary for those financial statements to reflect the Applicable Accounting Principles upon which the Original Financial Statements were prepared.

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(c)	Any reference in this Agreement to the financial statements of the Group delivered pursuant to Clause 20.1 (Financial statements) shall be construed as a reference to those financial statements as adjusted to reflect the Applicable Accounting Principles.
20.5	Information: miscellaneous
	The Company shall supply to the Agent (in sufficient copies for all the Lenders, if the Agent so requests):

(a)	all documents dispatched by the Company to its shareholders (or any class of them) or its creditors generally at the same time as they are dispatched;
(b)	promptly upon becoming aware of them, the details of any litigation, arbitration or administrative proceedings which are current, threatened or pending against any member of the Group, and which might, if adversely determined, have a Material Adverse Effect; and
(c)	promptly, such further information regarding the financial condition, business and operations of any member of the Group as any Finance Party (through the Agent) may reasonably request except to the extent that disclosure of the information would breach any law regulation, stock exchange requirement or duty of confidentiality.

20.6	Notification of default
(a)	Each Obligor shall notify the Agent of any Default and the steps, if any, being taken to remedy it promptly upon becoming aware of its occurrence (unless that Obligor is aware that a notification has already been provided by another Obligor).
(b)	Promptly upon a request by the Agent, the Company shall supply to the Agent a certificate signed by a director or authorised signatory on its behalf certifying that no Default is continuing (or if continuing, specifying the steps, if any, being taken to remedy it).
20.7	Use of websites
(a)	The Company may satisfy its obligation under this Agreement to deliver any information in relation to those Lenders (the “Website Lenders”) who accept this method of communication by posting this information onto an electronic website designated by the Company and the Agent (the “Designated Website”) if:

(i)	the Agent expressly agrees (after consultation with each of the Lenders) that it will accept communication of the information by this method;
(ii)	the Company and the Agent are aware of the address of and any relevant password specifications for the Designated Website; and
(iii)	the information is in a format previously agreed between the Company and the Agent.

If any Lender (a “Paper Form Lender”) does not agree to the delivery of information electronically then the Agent shall notify the Company accordingly and the Company shall supply the information to the Agent (in sufficient copies for each Paper Form Lender) in paper form. In any event the Company shall supply the Agent with at least one copy in paper form of any information required to be provided by it.

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(b)	The Agent shall supply each Website Lender with the address of and any relevant password specifications for the Designated Website following designation of that website by the Company and the Agent.
(c)	The Company shall promptly upon becoming aware of its occurrence notify the Agent if:

(i)	the Designated Website cannot be accessed due to technical failure;
(ii)	the password specifications for the Designated Website change;
(iii)	any new information which is required to be provided under this Agreement is posted onto the Designated Website;
(iv)	any existing information which has been provided under this Agreement and posted onto the Designated Website is amended; or
(v)	the Company becomes aware that the Designated Website or any information posted onto the Designated Website is or has been infected by any electronic virus or similar software.

	If the Company notifies the Agent under paragraph (c)(i) or paragraph (c)(v) above, all information to be provided by the Company under this Agreement after the date of that notice shall be supplied in paper form unless and until the Agent and each Website Lender is satisfied that the circumstances giving rise to the notification are no longer continuing.
(d)	Any Website Lender may request, through the Agent, one paper copy of any information required to be provided under this Agreement which is posted onto the Designated Website. The Company shall comply with any such request within ten Business Days.
20.8	“Know your customer” checks
(a)	If:

(i)	the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation made after the date of this Agreement;
(ii)	any change in the status of an Obligor after the date of this Agreement; or
(iii)	a proposed assignment or transfer by a Lender of any of its rights and obligations under this Agreement to a party that is not a Lender prior to such assignment or transfer,

obliges the Agent or any Lender (or, in the case of paragraph (iii) above, any prospective new Lender) to comply with “know your customer” or similar identification procedures in circumstances where the necessary information is not already available to it, each Obligor shall promptly upon the request of the Agent or any Lender supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Agent (for itself or on behalf of any Lender) or any Lender (for itself or, in the case of the event described in paragraph (iii) above, on behalf of any prospective new Lender) in order for the Agent, such Lender or, in the case of the event described in paragraph (iii) above, any prospective new Lender to carry out and be satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Finance Documents.

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(b)	Each Lender shall promptly upon the request of the Agent supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Agent (for itself) in order for the Agent to carry out and be satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Finance Documents.
(c)	The Company shall, by not less than 5 Business Days’ prior written notice to the Agent, notify the Agent (which shall promptly notify the Lenders) of its intention to request that one of its Subsidiaries becomes an Additional Obligor pursuant to Clause 25 (Changes to the Obligors).
(d)	Following the giving of any notice pursuant to paragraph (c) above, if the accession of such Additional Obligor obliges the Agent or any Lender to comply with “know your customer” or similar identification procedures in circumstances where the necessary information is not already available to it, the Company shall promptly upon the request of the Agent or any Lender supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Agent (for itself or on behalf of any Lender) or any Lender (for itself or on behalf of any prospective new Lender) in order for the Agent or such Lender or any prospective new Lender to carry out and be satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations pursuant to the accession of such Subsidiary to this Agreement as an Additional Obligor.
21.	FINANCIAL COVENANTS
21.1	Financial Condition
	The Company shall ensure that:

(a)	the ratio of EBITDA to Net Interest Payable for each Relevant Period will not be less than 3.50:1; and
(b)	the ratio of Net Borrowings as at the last day of each Relevant Period to EBITDA for that Relevant Period will not be more than 3.75:1, where EBITDA for the purpose of this covenant shall be adjusted to take into account the pro forma impact of any acquisitions or disposals (other than of Managed Assets) made during the Relevant Period by a member of the Group.

21.2	Financial covenant calculations
	For the purposes of this Agreement, Borrowings (including Financial Indebtedness for the purpose of calculating Borrowings), EBITDA, Net Borrowings and Net Interest Payable shall be:

(a)	calculated and interpreted on a consolidated basis in accordance with the Applicable Accounting Principles of the Company and shall be expressed in the currency in which the relevant financial statements of the Group delivered under Clause 20.1 (Financial statements) are presented; and
(b)	extracted (except as needed to reflect the terms of this Clause 21) from the financial statements of the Group delivered under Clause 20.1 (Financial statements) and Clause 20.2 (Compliance Certificate).

21.3	Definitions
	In this Agreement:

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“Borrowings” means, as at any particular time, the aggregate outstanding principal, capital or nominal amount (and any fixed or minimum premium payable on redemption) of the Financial Indebtedness of members of the Group, other than:

(a)	any indebtedness referred to in paragraph (g) of the definition of Financial Indebtedness;
(b)	any Project Finance Indebtedness; and
(c)	any indebtedness referred to in paragraphs (f)(ii), (i) and (j) of the definition of Financial Indebtedness except, in the case of paragraphs (i) and (j), to the extent any such obligation or liability specified in such paragraphs has been provided for in the financial statements of the Group delivered under Clause 20.1 (Financial statements) or is disclosed as a contingency in the notes thereto and is quantified,

and deducting, to the extent included, amounts attributable to interests of third parties in members of the Group.

For this purpose, any amount outstanding or repayable in a currency other than US Dollars shall on that day be taken into account in its US Dollar equivalent at the rate of exchange that would have been used had an audited consolidated balance sheet of the Group been prepared as at that day in accordance with IFRS as applicable to the Original Financial Statements.

“Cash” means any credit balances on any deposit, savings, current or other account, and any cash in hand, which is:

(a)	freely withdrawable on demand;
(b)	not subject to any Security (other than permitted pursuant to Clause 22.3 (Negative pledge));
(c)	denominated and payable in freely transferable and freely convertible currency; and
(d)	capable of being remitted to an Obligor in the United Kingdom.

“Cash Equivalents” means short-term, highly liquid investments that are readily convertible to known amounts of cash and which have contractual maturities of three months or less.

“EBITDA” means, in relation to any Relevant Period, the total consolidated operating profit of the Group for that Relevant Period:

(a) before taking into account:

(i)	Net Interest Payable;
(ii)	Tax; and
(iii)	all exceptional items; and

(b)	after adding back all amounts provided for depreciation and amortisation; and
(c)	deducting, to the extent included, amounts attributable to interests of third parties in members of the Group.

“Net Borrowings” means, as at any particular time, Borrowings less Cash and Cash Equivalents.

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“Net Interest Payable” means, in relation to any Relevant Period, the aggregate amount of interest and any other finance charges accrued by the Group in that Relevant Period in respect of Borrowings including:

(a)	the interest element of leasing and hire purchase payments;
(b)	commitment fees, commissions and guarantee fees; and
(c)	amounts in the nature of interest payable in respect of any shares other than equity share capital,

adjusted (but without double counting) by:

(i)	deducting interest income of the Group in respect of that Relevant Period;
(ii)	adding back the net amount payable (or deducting the net amount receivable) by members of the Group in that Relevant Period as a result of close-out or termination of any interest or (so far as they relate to interest) currency hedging activities;
(iii)	adding back the amount payable as a premium on any bond buy-back by members of the Group in that Relevant Period;
(iv)	deducting, to the extent included, the amount payable by members of the Group in that Relevant Period for arrangement or related fees in respect of Borrowings including, for the avoidance of doubt, any un-amortised fees to be written-off in respect of the Existing Facility (to include, for the avoidance of doubt, underwriting, syndication and fees of a similar nature)); and
(v)	deducting, to the extent included, the amount of interest and other finance charges attributable to interests of third parties in members of the Group and adjusting, as appropriate, the additions or deductions specified in paragraphs (i) to (iv) (inclusive) above as a consequence of interests of third parties in members of the Group,

but shall exclude in relation to the Relevant Period (A) net mark-to-market gains or losses on revaluation of financial instruments, and (B) for the avoidance of doubt, any amount of interest paid to the Group’s loyalty programme on the accumulated balance of cash received in advance of the redemption of loyalty points awarded.

“Relevant Period” means:

(a)	each financial year of the Company; and
(b)	each period beginning on the first day of the second half of a financial year of the Company and ending on the last day of the first half of its next financial year.

22.	GENERAL UNDERTAKINGS
	The undertakings in this Clause 22 remain in force from the date of this Agreement for so long as any amount is outstanding under the Finance Documents or any Commitment is in force.
22.1	Authorisations
	Each Obligor shall promptly:

(a) obtain, comply with and do all that is necessary to maintain in full force and effect; and

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(b) supply certified copies to the Agent of,

	any Authorisation required under any law or regulation of its jurisdiction of incorporation to enable it to perform its obligations under the Finance Documents and to ensure the legality, validity, enforceability or admissibility in evidence in its jurisdiction of incorporation of any Finance Document.
22.2	Compliance with laws
	Each Obligor shall comply with all laws to which it may be subject, if failure so to comply would materially impair its ability to perform its obligations under the Finance Documents.
22.3	Negative pledge
(a)	No Obligor shall (and the Company shall ensure that no other member of the Group will) create or permit to subsist any Security over any of its assets.
(b)	Paragraph (a) above does not apply to:

(i)	any Security listed in Schedule 9 (Security) except to the extent the principal amount secured by that Security exceeds the amount stated in that Schedule;
(ii)	any cash management, netting or set-off arrangement entered into by any member of the Group in the ordinary course of its banking arrangements for the purpose of netting debit and credit balances;
(iii)	any lien arising by operation of law and in the ordinary course of business;
(iv)	any Security over or affecting any asset acquired by a member of the Group after the date of this Agreement to the extent that:

(A)	the Security was not created in contemplation of the acquisition of that asset by a member of the Group; and
(B)	the principal amount secured has not been increased in contemplation of or since the acquisition of that asset by a member of the Group;

(v) any Security over or affecting any asset of any company which becomes a member of the Group after the date of this Agreement, where the Security is created prior to the date on which that company becomes a member of the Group, to the extent that:

(A)	the Security was not created in contemplation of the acquisition of that company; and
(B)	the principal amount secured has not increased in contemplation of or since the acquisition of that company;

(vi)	any Security created pursuant to any Finance Document;
(vii)	any title transfer or retention of title arrangement entered into by any member of the Group in the ordinary course of business;
(viii)	pledges of goods, the related documents of title and/or other related documents arising or created in the ordinary course of business as security for indebtedness to a bank or financial institution directly relating to the goods or documents over which that pledge exists;

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(ix)	any Security over cash or other investments for bank guarantees given in the ordinary course of trading securing liabilities of up to $100,000,000 (or its equivalent in any other currency or currencies) or to meet any margin requirement in respect of derivative transactions;
(x)	any Security resulting from the rules and regulations of any clearing system or stock exchange over shares and/or other securities held in that clearing system or stock exchange;
(xi)	any Security securing Project Finance Indebtedness;
(xii)	any Security provided in relation to the InterContinental executive top-up scheme securing liabilities of up to $100,000,000 (or its equivalent in any other currency or currencies);
(xiii)	any Security replacing any Security permitted under paragraph (i) above or this paragraph (xiii) and securing the same indebtedness or obligations whose principal amount does not exceed the maximum principal amount secured, or which could be secured, by the replaced Security when it is replaced;
(xiv)	any Security securing indebtedness the principal amount of which (when aggregated with the principal amount of any other indebtedness which has the benefit of Security given by any member of the Group other than any permitted under paragraphs (i) to (xiii) above) does not exceed 5 per cent. of the Consolidated Gross Assets of the Group as calculated using the most recently delivered financial statements of the Group; or
(xv)	any other Security created or outstanding with the prior consent of the Majority Lenders.

22.4	Disposals
(a)	No Obligor shall (and the Company shall ensure that no other member of the Group will) enter into a single transaction or a series of transactions (whether related or not and whether voluntary or involuntary) to sell, lease, transfer or otherwise dispose of any asset of the Group (each a “Disposal”).
(b)	Paragraph (a) above does not apply to any Disposal:

(i)	made in the ordinary course of day-to-day business of the disposing entity;
(ii)	of assets in exchange for or to be replaced within 12 months (or committed within 12 months to be replaced and actually replaced within 24 months) by other assets comparable or superior as to type, value and quality;
(iii)	of assets which are obsolete or redundant;
(iv)	which constitutes the payment of cash for any purpose not prohibited by any Finance Document;
(v)	by any member of the Group to another member of the Group;
(vi)	which constitutes any short term investment of funds not immediately required in the Group’s business and the realisation of those investments;
(vii)	which constitutes the making of a lawful distribution;

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(viii)	of assets which become Managed Assets following such Disposal;
(ix)	where the proceeds of that Disposal (net of fees, transaction costs and Taxes) (or such smaller amount having regard to other Disposals which are permitted to be made pursuant to the other sub-paragraphs of this paragraph (b)) are (within the period of 12 months following receipt of those proceeds) applied (or committed within the period of 12 months following receipt of those proceeds to be applied (and actually applied within the period of 18 months following receipt of those proceeds)) in or towards capital expenditure of the Group;
(x)	where any member of the Group has applied funds in or towards capital expenditure of the Group within the period of 12 months prior to the receipt of the proceeds of that Disposal and where the amount so applied is at least equal to the proceeds of that Disposal (net of fees, transaction costs and Taxes) or, to the extent it is less than those proceeds, the balance is attributed to, or applied pursuant to, another sub-paragraph of this paragraph (b).
(xi)	where an amount equal to the proceeds of that Disposal (net of fees, transaction costs and Taxes) (or such smaller amount having regard to other Disposals which are permitted to be made pursuant to the other sub-paragraphs of this paragraph (b)) is used in or towards a permanent reduction of Financial Indebtedness of the Group;
(xii)	to which the Majority Lenders have consented; or
(xiii)	where the higher of the market value or consideration receivable (when aggregated with the higher of the market value or consideration receivable for any other sale, lease, transfer or other disposal, to the extent not permitted under any of paragraphs (i) to (xii) above), does not exceed 7.5 per cent. of the Consolidated Gross Assets of the Group in any financial year as calculated using the most recently delivered financial statements of the Group.

22.5	Subsidiary Indebtedness
(a)	The Company shall ensure that the portion of Financial Indebtedness which is borrowed or incurred by Subsidiaries that are not Guarantors under this Agreement shall not at any time exceed the aggregate of:

(i)	$400,000,000 (or its equivalent in any other currency or currencies); and (but without double counting)
(ii)	$400,000,000 (or its equivalent in any other currency or currencies) (provided such amount relates exclusively to Financial Indebtedness specified in paragraphs (f)(ii), (i) and (j) of the definition of Financial Indebtedness),

and provided that Financial Indebtedness for the purpose of this Clause 22.5 shall exclude:

(A)	amounts borrowed under this Agreement;
(B)	qualifying amounts specified in paragraph (b) below which are secured as permitted pursuant to paragraphs (b)(iv) or (v) of Clause 22.3 (Negative pledge) or otherwise is outstanding for the period of up to 6 months following the relevant acquisition;

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(C)	amounts which would be included as Financial Indebtedness under paragraph (d) of the definition of Financial Indebtedness due to a change in IFRS after the date of this Agreement but would not be treated as Financial Indebtedness using Applicable Accounting Principles; and
(D)	amounts which are incurred in connection with the arrangements described in paragraph (b)(ii) of Clause 22.3 (Negative pledge).

(b) Where a member of the Group acquires an asset or a company after the date of this Agreement in respect of which Financial Indebtedness is outstanding (other than Project Finance Indebtedness), where:

(i)	that Financial Indebtedness was not created in contemplation of the acquisition of that asset or company; and
(ii)	that Financial Indebtedness has not increased in contemplation of or since that acquisition,

	then that Financial Indebtedness shall be permitted and be in addition to the threshold numbers specified in paragraph (a) above.
22.6	Change of business
	The Company shall procure that no substantial change is made to the general nature of the business of the Group taken as a whole from that anticipated to be carried on at the date of this Agreement but this shall not prevent any member of the Group engaging in any ancillary or related business.
22.7	Insurance
	Each Obligor shall (and the Company shall ensure that each other member of the Group will) maintain insurances on and in relation to its business and assets with reputable underwriters or insurance companies against those risks, and to the extent, usually insured against by prudent companies located in the same or a similar location and carrying on a similar business.
22.8	Acquisitions
	No Obligor shall (and the Company shall ensure that no other member of the Group will) complete (without the approval of the Majority Lenders which shall not be unreasonably withheld or delayed) any acquisition (whether through a single transaction or series of related transactions with the same party or with parties connected with one another) where the consideration for the acquisition exceeds 25 per cent. of the Group’s market capitalisation at the time of the London Stock Exchange market close on the day falling immediately prior to the date of formal announcement of such acquisition by the Company.
22.9	Disposal of Receivables
(a)	No Obligor shall (and the Company shall ensure that no other member of the Group will) sell, transfer or otherwise dispose of any of its trade receivables.
(b)	Paragraph (a) above does not apply to any sale, transfer or other disposal of any of its receivables where the aggregate face value of all such receivables that are outstanding at any time does not exceed $70,000,000 (or its equivalent in any other currency or currencies).

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23.	EVENTS OF DEFAULT
	Each of the events or circumstances set out in Clause 23 is an Event of Default.
23.1	Non-payment
	An Obligor does not pay on the due date any amount payable pursuant to a Finance Document at the place at and in the currency in which it is expressed to be payable unless:

(a)	its failure to pay is caused by administrative or technical error; and
(b)	payment is made within 5 Business Days of its due date.

23.2	Financial covenants
	Any requirement of Clause 21 (Financial covenants) is not satisfied.
23.3	Other obligations

(a)	An Obligor does not comply with any provision of the Finance Documents (other than those referred to in Clause 23.1 (Non-payment) and Clause 23.2 (Financial covenants)).
(b)	No Event of Default under paragraph (a) above will occur if the failure to comply is capable of remedy and is remedied within 20 days of the earlier of Agent giving notice to the Company or the Company becoming aware of the failure to comply.
23.4	Misrepresentation
(a)	Any representation or statement made or deemed to be made by an Obligor in the Finance Documents or any other document delivered by or on behalf of any Obligor under or in connection with any Finance Document is or proves to have been incorrect or misleading in any material respect when made or deemed to be made.
(b)	No Event of Default under paragraph (a) above will occur if the circumstances giving rise to a misrepresentation or misstatement is/are capable of remedy and is/are remedied within 20 days of the Agent giving notice to the Company requiring such remedy or (if earlier) the Company becoming aware of the failure to comply.
23.5	Cross default
(a)	Any Financial Indebtedness of any member of the Group is not paid when due nor within any applicable grace period.
(b)	Any Financial Indebtedness of any member of the Group is declared to be or otherwise becomes due and payable prior to its specified maturity as a result of an event of default (however described).
(c)	Any creditor of any member of the Group becomes entitled to declare any Financial Indebtedness of any member of the Group due and payable prior to its specified maturity as a result of an event of default (however described).
(d)	No Event of Default will occur under this Clause 23.5 if the aggregate amount of Financial Indebtedness or commitment for Financial Indebtedness falling within paragraphs (a) and (b) above is less than $50,000,000 (or its equivalent in any other currency or currencies) and Financial Indebtedness for the purposes of this Clause 23.5 shall exclude, in each case, Project Finance Indebtedness.

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23.6	Insolvency
(a)	An Obligor or a Material Subsidiary is unable or admits inability to pay its debts as they fall due, suspends making payments on any of its debts or, by reason of actual or anticipated financial difficulties, commences negotiations with one or more of its creditors with a view to rescheduling any of its indebtedness.
(b)	A moratorium is declared or takes effect in respect of all or a material part (or a particular type of) the indebtedness of an Obligor or a Material Subsidiary.
23.7	Insolvency proceedings
(a)	Any corporate action or legal proceeding is taken (subject to paragraph (d) below) for the winding-up or dissolution of an Obligor or Material Subsidiary, or the appointment of a liquidator, administrator, administrative receiver, compulsory manager or other similar officer is appointed in respect of, an Obligor or Material Subsidiary other than for a solvent winding-up, dissolution or liquidation of an Obligor (other than the Company or the Guarantors) or a Material Subsidiary.
(b)	Any corporate action or legal proceeding is taken (subject to paragraph (d) below), or an agreement is entered into or proposed by an Obligor or Material Subsidiary, for the suspension of payments by, a moratorium of any indebtedness of, or a general composition, compromise or assignment for the benefit of the creditors of, an Obligor or Material Subsidiary.
(c)	A receiver, administrative receiver, compulsory manager or other similar officer is appointed in respect of an Obligor or Material Subsidiary or any of its assets, or any Security is enforced over an Obligor’s or Material Subsidiary’s assets, having an aggregate value of and in respect of indebtedness aggregating not less than $50,000,000 (or its equivalent in any other currency or currencies).
(d)	A person presents a petition for the winding up, liquidation, dissolution, administration or suspension of payments of an Obligor or Material Subsidiary except:

(i)	where such petition is being contested in good faith and by appropriate means and is in any event dismissed within 30 days of its presentation; or
(ii)	where such presentation is frivolous or vexatious or an abuse of process and is in any event dismissed within 30 days of its presentation.

23.8	Creditors’ process
	Any expropriation, attachment, sequestration, distress or execution affects any asset or assets of an Obligor or Material Subsidiary having an aggregate value of and in respect of indebtedness aggregating at least $50,000,000 (or its equivalent in any other currency or currencies) and is not discharged within 30 days.
23.9	Ownership of the Obligors
	An Obligor (other than the Company) is not or ceases to be a Subsidiary of the Company.
23.10	Unlawfulness
	It is or becomes unlawful for an Obligor to perform any of its material obligations under the Finance Documents.

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23.11	Repudiation
	An Obligor repudiates a Finance Document or evidences an intention to repudiate a Finance Document.
23.12	Cessation of business
	An Obligor ceases to carry on its business except pursuant to a reconstruction, amalgamation, merger or consolidation on solvent terms or, for the avoidance of doubt, by way of a disposal.
23.13	Acceleration
	On and at any time after the occurrence of an Event of Default which is continuing the Agent may, and shall if so directed by the Majority Lenders, by notice to the Company:

(a)	cancel the Total Commitments whereupon they shall immediately be cancelled;
(b)	declare that all or part of the Loans, together with accrued interest, and all other amounts accrued or outstanding under the Finance Documents be immediately due and payable, whereupon they shall become immediately due and payable; and/or
(c)	declare that all or part of the Loans be payable on demand, whereupon they shall immediately become payable on demand by the Agent on the instructions of the Majority Lenders.

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SECTION 9

CHANGES TO PARTIES

24.	CHANGES TO THE LENDERS
24.1	Assignments and transfers by the Lenders
	Subject to this Clause 24, a Lender (the “Existing Lender”) may:

(a)	assign any of its rights; or
(b)	transfer by novation any of its rights and obligations,

	to another bank or financial institution which is a Qualifying Lender or, following the occurrence of an Event of Default which is continuing, to a trust, fund or other entity which is regularly engaged in or established for the purpose of making, purchasing or investing in loans, securities or other financial assets which, in each case, is a Qualifying Lender (the “New Lender”).
24.2	Conditions of assignment or transfer
(a)	The consent of the Company is required for an assignment or transfer by an Existing Lender, unless the assignment or transfer is to another Lender or an Affiliate of a Lender or following the occurrence of an Event of Default which is continuing.
(b)	The consent of the Company to an assignment or transfer must not be unreasonably withheld or delayed. The Company will be deemed to have given its consent ten days after the Existing Lender has requested it unless consent is expressly refused by the Company within that time.
(c)	The consent of the Company to an assignment or transfer must not be withheld solely because the assignment or transfer may result in an increase to the Mandatory Costs.
(d)	A partial transfer by a Lender shall be in a minimum amount of $10,000,000.
(e)	An assignment will only be effective on:

(i)	receipt by the Agent of written confirmation from the New Lender (in form and substance satisfactory to the Agent) that the New Lender will assume the same obligations to the other Finance Parties as it would have been under if it was an Original Lender; and
(ii)	performance by the Agent of all “know your customer” or other checks relating to any person that it is required to carry out in relation to such assignment to a New Lender, the completion of which the Agent shall promptly notify to the Existing Lender and the New Lender.

(f)	A transfer will only be effective if the procedure set out in Clause 24.5 (Procedure for transfer) is complied with.
(g)	If:

(i)	a Lender assigns or transfers any of its rights or obligations under the Finance Documents or changes its Facility Office; and
(ii)	as a result of circumstances existing at the date the assignment, transfer or change occurs, an Obligor would be obliged to make a payment to the New Lender or Lender

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acting through its new Facility Office under Clause 13 (Tax gross-up and indemnities) or Clause 14 (Increased Costs),

	then the New Lender or Lender acting through its new Facility Office is only entitled to receive payment under those Clauses to the same extent as the Existing Lender or Lender acting through its previous Facility Office would have been if the assignment, transfer or change had not occurred.
24.3	Assignment or transfer fee
	The New Lender shall, on the date upon which an assignment or transfer takes effect, pay to the Agent (for its own account) a fee of £1500.
24.4	Limitation of responsibility of Existing Lenders
(a)	Unless expressly agreed to the contrary, an Existing Lender makes no representation or warranty and assumes no responsibility to a New Lender for:

(i)	the legality, validity, effectiveness, adequacy or enforceability of the Finance Documents or any other documents;
(ii)	the financial condition of any Obligor;
(iii)	the performance and observance by any Obligor of its obligations under the Finance Documents or any other documents; or
(iv)	the accuracy of any statements (whether written or oral) made in or in connection with any Finance Document or any other document,

	and any representations or warranties implied by law are excluded.
(b)	Each New Lender confirms to the Existing Lender and the other Finance Parties that it:

(i)	has made (and shall continue to make) its own independent investigation and assessment of the financial condition and affairs of each Obligor and its related entities in connection with its participation in this Agreement and has not relied exclusively on any information provided to it by the Existing Lender in connection with any Finance Document; and
(ii)	will continue to make its own independent appraisal of the creditworthiness of each Obligor and its related entities whilst any amount is or may be outstanding under the Finance Documents or any Commitment is in force.

(c) Nothing in any Finance Document obliges an Existing Lender to:

(i)	accept a re-transfer from a New Lender of any of the rights and obligations assigned or transferred under this Clause 24; or
(ii)	support any losses directly or indirectly incurred by the New Lender by reason of the non-performance by any Obligor of its obligations under the Finance Documents or otherwise.

24.5	Procedure for transfer
(a)	Subject to the conditions set out in Clause 24.2 (Conditions of assignment or transfer) a transfer is effected in accordance with paragraph (b) below when the Agent executes an otherwise duly completed Transfer Certificate delivered to it by the Existing Lender and the New Lender. The

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	Agent shall, subject to paragraph (b) below, as soon as reasonably practicable after receipt by it of a duly completed Transfer Certificate appearing on its face to comply with the terms of this Agreement and delivered in accordance with the terms of this Agreement, execute that Transfer Certificate.
(b)	The Agent shall only be obliged to execute a Transfer Certificate delivered to it by the Existing Lender and the New Lender once it is satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations in relation to the transfer to such New Lender.
(c)	On the Transfer Date:

(i)	to the extent that in the Transfer Certificate the Existing Lender seeks to transfer by novation its rights and obligations under the Finance Documents each of the Obligors and the Existing Lender shall be released from further obligations towards one another under the Finance Documents and their respective rights against one another under the Finance Documents shall be cancelled (being the “Discharged Rights and Obligations”);
(ii)	each of the Obligors and the New Lender shall assume obligations towards one another and/or acquire rights against one another which differ from the Discharged Rights and Obligations only insofar as that Obligor and the New Lender have assumed and/or acquired the same in place of that Obligor and the Existing Lender;
(iii)	the Agent, the Arranger, the New Lender and other Lenders shall acquire the same rights and assume the same obligations between themselves as they would have acquired and assumed had the New Lender been an Original Lender with the rights and/or obligations acquired or assumed by it as a result of the transfer and to that extent the Agent, the Arranger and the Existing Lender shall each be released from further obligations to each other under the Finance Documents; and
(iv)	the New Lender shall become a Party as a “Lender”.

24.6	Copy of Transfer Certificate to Company
	The Agent shall, as soon as reasonably practicable after it has executed a Transfer Certificate, send to the Company a copy of that Transfer Certificate.
24.7	Disclosure of information
	Any Lender may disclose, on a need to know basis, to any of its Affiliates and any other person:

(a)	to (or through) whom that Lender assigns or transfers (or may potentially assign or transfer) all or any of its rights and obligations under this Agreement for the purpose of that actual or potential assignment or transfer;
(b)	with (or through) whom that Lender enters into (or may potentially enter into) any sub-participation in relation to, or any other transaction under which payments are to be made by reference to, this Agreement or any Obligor for the purpose of that actual or potential sub-participation or transfer; or
(c)	to whom, and to the extent that, information is required to be disclosed by any applicable law or regulation,

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	any information about any Obligor, the Group and the Finance Documents as that Lender shall consider appropriate if, in relation to paragraphs (a) and (b) above, the person to whom the information is to be given has entered into a Confidentiality Undertaking. This Clause supersedes any previous agreement relating to the confidentiality of this information.
24.8	Confidentiality
	Each Finance Party undertakes with each Obligor:

(a) to keep confidential and not to disclose to anyone any information (including any projections) relating to the Group, any member of the Group or any Finance Document, in whatever form, and including information given orally and any document, electronic file or any other way of representing or recording information which contains or is derived or copied from such information except:

(i)	for any lawfully obtained from any other source, or that is or becomes public knowledge, other than as a direct or indirect result of any breach of any obligation of confidentiality; or
(ii)	as permitted by Clause 24.7 (Disclosure of information) or by a Confidentiality Undertaking envisaged by that Clause;

(b)	to use that information only for the purpose of, or as permitted by, the Finance Documents; and
(c)	to use all reasonable endeavours to ensure that any person to whom that Finance Party passes any such information (unless disclosed under paragraph (c) of Clause 24.7 (Disclosure of information) acknowledges and complies with the provisions of this Clause 24.8 as if that person were also bound by it.

25.	CHANGES TO THE OBLIGORS
25.1	Assignments and transfer by Obligors
	No Obligor may assign any of its rights or transfer any of its rights or obligations under the Finance Documents.
25.2	Additional Borrowers
(a)	Subject to compliance with the provisions of paragraphs (c) and (d) of Clause 20.8 (“Know your customer” checks), the Company may request that any of its Subsidiaries becomes an Additional Borrower. That Subsidiary shall become an Additional Borrower if:

(i)	all Lenders (acting reasonably) approve the addition of that Subsidiary and which they shall do so if that Subsidiary is a wholly owned subsidiary incorporated in the United Kingdom;
(ii)	the Company delivers to the Agent a duly completed and executed Accession Letter;
(iii)	the Company confirms that no Default is continuing or would occur as a result of that Subsidiary becoming an Additional Borrower; and
(iv)	the Agent has received all of the documents and other evidence listed in Part II of Schedule 2 (Conditions precedent) in relation to that Additional Borrower, each in form and substance reasonably satisfactory to the Agent.

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(b)	The Agent shall notify the Company and the Lenders promptly upon being satisfied that it has received (in form and substance reasonably satisfactory to it) all the documents and other evidence listed in Part II of Schedule 2 (Conditions precedent).
25.3	Resignation of a Borrower
(a)	The Company may request that a Borrower (other than the Company) ceases to be a Borrower by delivering to the Agent a Resignation Letter.
(b)	The Agent shall accept a Resignation Letter and notify the Company and the Lenders of its acceptance if:

(i)	no Default is continuing or would result from the acceptance of the Resignation Letter (and the Company has confirmed this is the case); and
(ii)	that Borrower is under no actual or contingent obligations as a Borrower under any Finance Documents,

	whereupon that company shall cease to be a Borrower and shall have no further rights or obligations under the Finance Documents.
25.4	Additional Guarantors
(a)	Subject to compliance with the provisions of paragraphs (c) and (d) of Clause 20.8 (“Know your customer” checks), the Company may request that any of its Subsidiaries become an Additional Guarantor. That Subsidiary shall become an Additional Guarantor if:

(i)	the Company delivers to the Agent a duly completed and executed Accession Letter; and
(ii)	the Agent has received all of the documents and other evidence listed in Part II of Schedule 2 (Conditions precedent) in relation to that Additional Guarantor, each in form and substance reasonably satisfactory to the Agent.

(b)	The Agent shall notify the Company and the Lenders promptly upon being satisfied that it has received (in form and substance reasonably satisfactory to it) all the documents and other evidence listed in Part II of Schedule 2 (Conditions precedent).
25.5	Repetition of Representations
	Delivery of an Accession Letter constitutes confirmation by the relevant Subsidiary that the Repeating Representations are true and correct in relation to it as at the date of delivery as if made by reference to the facts and circumstances then existing.
25.6	Resignation of a Guarantor
(a)	The Company may request that a Guarantor (other than the Company) ceases to be a Guarantor by delivering to the Agent a Resignation Letter.
(b)	The Agent shall accept a Resignation Letter and notify the Company and the Lenders of its acceptance if:

(i)	no Default is continuing or would result from the acceptance of the Resignation Letter (and the Company has confirmed this is the case); and
(ii)	the Majority Lenders have consented to the Company’s request (which they shall do if in relation to any Subsidiary of the Company, Clause 22.5 (Subsidiary Indebtedness) is being complied with at such time).

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SECTION 10

THE FINANCE PARTIES

26.	ROLE OF THE AGENT AND THE ARRANGER
26.1	Appointment of the Agent
(a)	Each other Finance Party appoints the Agent to act as its agent under and in connection with the Finance Documents.
(b)	Each other Finance Party authorises the Agent to exercise the rights, powers, authorities and discretions specifically given to the Agent under or in connection with the Finance Documents together with any other incidental rights, powers, authorities and discretions.
26.2	Duties of the Agent
(a)	The Agent shall promptly forward to a Party the original or a copy of any document which is delivered to the Agent for that Party by any other Party.
(b)	Except where a Finance Document specifically provides otherwise, the Agent is not obliged to review or check the adequacy, accuracy or completeness of any document it forwards to another Party.
(c)	If the Agent receives notice from a Party referring to this Agreement, describing a Default and stating that the circumstance described is a Default, it shall promptly notify the Finance Parties.
(d)	If the Agent is aware of the non-payment of any principal, interest, commitment fee or other fee payable to a Finance Party (other than the Agent or the Arranger) under this Agreement it shall promptly notify the other Finance Parties.
(e)	The Agent’s duties under the Finance Documents are solely mechanical and administrative in nature.
26.3	Role of the Arranger
	Except as specifically provided in the Finance Documents, the Arranger has no obligations of any kind to any other Party under or in connection with any Finance Document.
26.4	No fiduciary duties
(a)	Nothing in this Agreement constitutes the Agent or the Arranger as a trustee or fiduciary of any other person.
(b)	Neither the Agent nor the Arranger shall be bound to account to any Lender for any sum or the profit element of any sum received by it for its own account.
26.5	Business with the Group
	The Agent and the Arranger may accept deposits from, lend money to and generally engage in any kind of banking or other business with any member of the Group.
26.6	Rights and discretions of the Agent
(a)	The Agent may rely on:

(i) any representation, notice or document believed by it to be genuine, correct and appropriately authorised; and

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(ii) any statement made by a director, authorised signatory or employee of any person regarding any matters which may reasonably be assumed to be within his knowledge or within his power to verify.

(b) The Agent may assume (unless it has received notice to the contrary in its capacity as agent for the Lenders) that:

(i)	no Default has occurred (unless it has actual knowledge of a Default arising under Clause 23.1 (Non-payment));
(ii)	any right, power, authority or discretion vested in any Party or the Majority Lenders has not been exercised; and
(iii)	any notice or request made by the Company (other than a Utilisation Request or Selection Notice) is made on behalf of and with the consent and knowledge of all the Obligors.

(c)	The Agent may engage, pay for and rely on the advice or services of any lawyers, accountants, surveyors or other experts.
(d)	The Agent may act in relation to the Finance Documents through its personnel and agents.
(e)	The Agent may disclose to any other Party any information it reasonably believes it has received as agent under this Agreement.
(f)	Notwithstanding any other provision of any Finance Document to the contrary, neither the Agent nor the Arranger is obliged to do or omit to do anything if it would or might in its reasonable opinion constitute a breach of any law or regulation or a breach of a fiduciary duty or duty of confidentiality.
26.7	Majority Lenders’ instructions
(a)	Unless a contrary indication appears in a Finance Document, the Agent shall (i) exercise any right, power, authority or discretion vested in it as Agent in accordance with any instructions given to it by the Majority Lenders (or, if so instructed by the Majority Lenders, refrain from exercising any right, power, authority or discretion vested in it as Agent) and (ii) not be liable for any act (or omission) if it acts (or refrains from taking any action) in accordance with an instruction of the Majority Lenders.
(b)	Unless a contrary indication appears in a Finance Document, any instructions given by the Majority Lenders will be binding on all the Finance Parties.
(c)	The Agent may refrain from acting in accordance with the instructions of the Majority Lenders (or, if appropriate, the Lenders) until it has received such security as it may require for any cost, loss or liability (together with any associated VAT) which it may incur in complying with the instructions.
(d)	In the absence of instructions from the Majority Lenders (or, if appropriate, the Lenders), the Agent may act (or refrain from taking action) as it considers to be in the best interest of the Lenders.
(e)	The Agent is not authorised to act on behalf of a Lender (without first obtaining that Lender’s consent) in any legal or arbitration proceedings relating to any Finance Document.

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26.8	Responsibility for documentation
	Neither the Agent nor the Arranger:

(a)	is responsible for the adequacy, accuracy and/or completeness of any information (whether oral or written) supplied by the Agent, the Arranger, an Obligor or any other person given in or in connection with any Finance Document; or
(b)	is responsible for the legality, validity, effectiveness, adequacy or enforceability of any Finance Document or any other agreement, arrangement or document entered into, made or executed in anticipation of or in connection with any Finance Document.

26.9	Exclusion of liability
(a)	Without limiting paragraph (b) below, the Agent will not be liable for any action taken by it under or in connection with any Finance Document, unless directly caused by its gross negligence or wilful misconduct.
(b)	No Party (other than the Agent) may take any proceedings against any officer, employee or agent of the Agent in respect of any claim it might have against the Agent or in respect of any act or omission of any kind by that officer, employee or agent in relation to any Finance Document and any officer, employee or agent of the Agent may rely on this Clause.
(c)	The Agent will not be liable for any delay (or any related consequences) in crediting an account with an amount required under the Finance Documents to be paid by the Agent if the Agent has taken all necessary steps as soon as reasonably practicable to comply with the regulations or operating procedures of any recognised clearing or settlement system used by the Agent for that purpose.
(d)	Nothing in this Agreement shall oblige the Agent or the Arranger to carry out any “know your customer” or other checks in relation to any person on behalf of any Lender and each Lender confirms to the Agent and the Arranger that it is solely responsible for any such checks it is required to carry out and that it may not rely on any statement in relation to such checks made by the Agent or the Arranger.
26.10	Lenders’ indemnity to the Agent
	Each Lender shall (in proportion to its share of the Total Commitments or, if the Total Commitments are then zero, to its share of the Total Commitments immediately prior to their reduction to zero) indemnify the Agent, within three Business Days of demand, against any cost, loss or liability incurred by the Agent (otherwise than by reason of the Agent’s gross negligence or wilful misconduct) in acting as Agent under the Finance Documents (unless the Agent has been reimbursed by an Obligor pursuant to a Finance Document).
26.11	Resignation of the Agent
(a)	The Agent may resign and appoint one of its Affiliates acting through an office in the United Kingdom as successor by giving notice to the other Finance Parties and the Company.
(b)	Alternatively the Agent may resign by giving notice to the other Finance Parties and the Company, in which case the Majority Lenders (after consultation with the Company) may appoint a successor Agent.

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(c)	If the Majority Lenders have not appointed a successor Agent in accordance with paragraph (b) above within 30 days after notice of resignation was given, the Agent (after consultation with the Company) may appoint a successor Agent (acting through an office in the United Kingdom).
(d)	The retiring Agent shall, at its own cost, make available to the successor Agent such documents and records and provide such assistance as the successor Agent may reasonably request for the purposes of performing its functions as Agent under the Finance Documents.
(e)	The Agent’s resignation notice shall only take effect upon the appointment of a successor.
(f)	Upon the appointment of a successor, the retiring Agent shall be discharged from any further obligation in respect of the Finance Documents but shall remain entitled to the benefit of this Clause 26. Its successor and each of the other Parties shall have the same rights and obligations amongst themselves as they would have had if such successor had been an original Party.
(g)	After consultation with the Company the Majority Lenders may, by notice to the Agent, require it to resign in accordance with paragraph (b) above. In this event, the Agent shall resign in accordance with paragraph (b) above.
26.12	Confidentiality
(a)	In acting as agent for the Finance Parties, the Agent shall be regarded as acting through its agency division which shall be treated as a separate entity from any other of its divisions or departments.
(b)	If information is received by another division or department of the Agent, it may be treated as confidential to that division or department and the Agent shall not be deemed to have notice of it.
26.13	Relationship with the Lenders
(a)	The Agent may treat each Lender as a Lender, entitled to payments under this Agreement and acting through its Facility Office unless it has received not less than five Business Days prior notice from that Lender to the contrary in accordance with the terms of this Agreement.
(b)	Each Lender shall supply the Agent with any information required by the Agent in order to calculate the Mandatory Cost in accordance with Schedule 4 (Mandatory Cost formulae).
26.14	Credit appraisal by the Lenders
	Without affecting the responsibility of any Obligor for information supplied by it or on its behalf in connection with any Finance Document, each Lender confirms to the Agent and the Arranger that it has been, and will continue to be, solely responsible for making its own independent appraisal and investigation of all risks arising under or in connection with any Finance Document including but not limited to:

(a)	the financial condition, status and nature of each member of the Group;
(b)	the legality, validity, effectiveness, adequacy or enforceability of any Finance Document and any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document;
(c)	whether that Lender has recourse, and the nature and extent of that recourse, against any Party or any of its respective assets under or in connection with any Finance Document, the transactions contemplated by the Finance Documents or any other

66

	agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document; and
(d)	the adequacy, accuracy and/or completeness of any information provided by the Agent, any Party or by any other person under or in connection with any Finance Document, the transactions contemplated by the Finance Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document.

26.15	Reference Banks
	If a Reference Bank (or, if a Reference Bank is not a Lender, the Lender of which it is an Affiliate) ceases to be a Lender, the Agent shall (in agreement with the Company, such agreement not to be unreasonably withheld) appoint another Lender or an Affiliate of a Lender to replace that Reference Bank.
26.16	Deduction from amounts payable by the Agent
	If any Party owes an amount to the Agent under the Finance Documents the Agent may, after giving notice to that Party, deduct an amount not exceeding that amount from any payment to that Party which the Agent would otherwise be obliged to make under the Finance Documents and apply the amount deducted in or towards satisfaction of the amount owed. For the purposes of the Finance Documents that Party shall be regarded as having received any amount so deducted.
27.	CONDUCT OF BUSINESS BY THE FINANCE PARTIES
	No provision of this Agreement will:

(a)	interfere with the right of any Finance Party to arrange its affairs (tax or otherwise) in whatever manner it thinks fit;
(b)	oblige any Finance Party to investigate or claim any credit, relief, remission or repayment available to it or the extent, order and manner of any claim; or
(c)	oblige any Finance Party to disclose any information relating to its affairs (tax or otherwise) or any computations in respect of Tax.

28.	SHARING AMONG THE FINANCE PARTIES
28.1	Payments to Finance Parties
	If a Finance Party (a “Recovering Finance Party”) receives or recovers any amount from an Obligor other than in accordance with Clause 29 (Payment mechanics) and applies that amount to a payment due under the Finance Documents then:

(a)	the Recovering Finance Party shall, within three Business Days, notify details of the receipt or recovery to the Agent;
(b)	the Agent shall determine whether the receipt or recovery is in excess of the amount the Recovering Finance Party would have been paid had the receipt or recovery been received or made by the Agent and distributed in accordance with Clause 29 (Payment mechanics), without taking account of any Tax which would be imposed on the Agent in relation to the receipt, recovery or distribution; and

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(c) the Recovering Finance Party shall, within three Business Days of demand by the Agent, pay to the Agent an amount (the “Sharing Payment”) equal to such receipt or recovery less any amount which the Agent determines may be retained by the Recovering Finance Party as its share of any payment to be made, in accordance with Clause 29.5 (Partial payments).

28.2	Redistribution of payments
	The Agent shall treat the Sharing Payment as if it had been paid by the relevant Obligor and distribute it between the Finance Parties (other than the Recovering Finance Party) in accordance with Clause 29.5 (Partial payments).
28.3	Recovering Finance Party’s rights
(a)	On a distribution by the Agent under Clause 28.2 (Redistribution of payments), the Recovering Finance Party will be subrogated to the rights of the Finance Parties which have shared in the redistribution.
(b)	If and to the extent that the Recovering Finance Party is not able to rely on its rights under paragraph (a) above, the relevant Obligor shall be liable to the Recovering Finance Party for a debt equal to the Sharing Payment which is immediately due and payable.
28.4	Reversal of redistribution
	If any part of the Sharing Payment received or recovered by a Recovering Finance Party becomes repayable and is repaid by that Recovering Finance Party, then:

(a)

each Finance Party which has received a share of the relevant Sharing Payment pursuant to Clause 28.2 (Redistribution of payments) shall, upon request of the Agent, pay to the Agent for account of that Recovering Finance Party an amount equal to the appropriate part of its share of the Sharing Payment (together with an amount as is necessary to reimburse that Recovering Finance Party for its proportion of any interest on the Sharing Payment which that Recovering Finance Party is required to pay); and

(b)

that Recovering Finance Party’s rights of subrogation in respect of any reimbursement shall be cancelled and the relevant Obligor will be liable to the reimbursing Finance Party for the amount so reimbursed.

28.5	Exceptions
(a)	This Clause 28 shall not apply to the extent that the Recovering Finance Party would not, after making any payment pursuant to this Clause, have a valid and enforceable claim against the relevant Obligor.
(b)	A Recovering Finance Party is not obliged to share with any other Finance Party any amount which the Recovering Finance Party has received or recovered as a result of taking legal or arbitration proceedings, if:

(i)	it notified that other Finance Party of the legal or arbitration proceedings; and
(ii)	that other Finance Party had an opportunity to participate in those legal or arbitration proceedings but did not do so as soon as reasonably practicable having received notice and did not take separate legal or arbitration proceedings.

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SECTION 11

ADMINISTRATION

29.	PAYMENT MECHANICS
29.1	Payments to the Agent
(a)	On each date on which an Obligor or a Lender is required to make a payment under a Finance Document, that Obligor or Lender shall make the same available to the Agent (unless a contrary indication appears in a Finance Document) for value on the due date at the time and in such funds specified by the Agent as being customary at the time for settlement of transactions in the relevant currency in the place of payment.
(b)	Payment shall be made to such account in the principal financial centre of the country of that currency (or, in relation to euro, in the principal financial centre in a Participating Member State or London) with such bank as the Agent specifies.
29.2	Distributions by the Agent
	Each payment received by the Agent under the Finance Documents for another Party shall, subject to Clause 29.3 (Distributions to an Obligor) and Clause 29.4 (Clawback), be made available by the Agent as soon as practicable after receipt to the Party entitled to receive payment in accordance with this Agreement (in the case of a Lender, for the account of its Facility Office), to such account as that Party may notify to the Agent by not less than five Business Days’ notice with a bank in the principal financial centre of the country of that currency (or, in relation to euro, in the principal financial centre of a Participating Member State or London).
29.3	Distributions to an Obligor
	The Agent may (with the consent of the Obligor or in accordance with Clause 30 (Set-off)) apply any amount received by it for that Obligor in or towards payment (on the date and in the currency and funds of receipt) of any amount due from that Obligor under the Finance Documents or in or towards purchase of any amount of any currency to be so applied.
29.4	Clawback
(a)	Where a sum is to be paid to the Agent under the Finance Documents for another Party, the Agent is not obliged to pay that sum to that other Party (or to enter into or perform any related exchange contract) until it has been able to establish to its satisfaction that it has actually received that sum.
(b)	If the Agent pays an amount to another Party and it proves to be the case that the Agent had not actually received that amount, then the Party to whom that amount (or the proceeds of any related exchange contract) was paid by the Agent shall on demand refund the same to the Agent together with interest on that amount from the date of payment to the date of receipt by the Agent, calculated by the Agent to reflect its cost of funds.
29.5	Partial payments
(a)	If the Agent receives a payment that is insufficient to discharge all the amounts then due and payable by an Obligor under the Finance Documents, the Agent shall apply that payment towards the obligations of that Obligor under the Finance Documents in the following order:

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(i)	first, in or towards payment pro rata of any unpaid fees, costs and expenses of the Agent or the Arranger under the Finance Documents;
(ii)	secondly, in or towards payment pro rata of any accrued interest, fee or commission due but unpaid under this Agreement;
(iii)	thirdly, in or towards payment pro rata of any principal due but unpaid under this Agreement; and
(iv)	fourthly, in or towards payment pro rata of any other sum due but unpaid under the Finance Documents.

(b)	The Agent shall, if so directed by the Majority Lenders, vary the order set out in paragraphs (a)(ii) to (iv) above.
(c)	Paragraphs (a) and (b) above will override any appropriation made by an Obligor.
29.6	No set-off by Obligors
	All payments to be made by an Obligor under the Finance Documents shall be calculated and be made without (and free and clear of any deduction for) set-off or counterclaim.
29.7	Business Days
(a)	Any payment which is due to be made on a day that is not a Business Day shall be made on the next Business Day in the same calendar month (if there is one) or the preceding Business Day (if there is not).
(b)	During any extension of the due date for payment of any principal or Unpaid Sum under this Agreement interest is payable on the principal or Unpaid Sum at the rate payable on the original due date.
29.8	Currency of account
(a)	Subject to paragraphs (b) to (e) below, the Base Currency is the currency of account and payment for any sum due from an Obligor under any Finance Document.
(b)	A repayment of a Loan or Unpaid Sum or a part of a Loan or Unpaid Sum shall be made in the currency in which that Loan or Unpaid Sum is denominated on its due date.
(c)	Each payment of interest shall be made in the currency in which the sum in respect of which the interest is payable was denominated when that interest accrued.
(d)	Each payment in respect of costs, expenses or Taxes shall be made in the currency in which the costs, expenses or Taxes are incurred.
(e)	Any amount expressed to be payable in a currency other than the Base Currency shall be paid in that other currency.
29.9	Change of currency
(a)	Unless otherwise prohibited by law, if more than one currency or currency unit are at the same time recognised by the central bank of any country as the lawful currency of that country, then:

(i) any reference in the Finance Documents to, and any obligations arising under the Finance Documents in, the currency of that country shall be translated into, or paid in,

70

	the currency or currency unit of that country designated by the Agent (acting reasonably and after consultation with the Company; and
(ii)	any translation from one currency or currency unit to another shall be at the official rate of exchange recognised by the central bank for the conversion of that currency or currency unit into the other, rounded up or down by the Agent (acting reasonably and after consultation with the Company).

(b)	If a change in any currency of a country occurs, this Agreement will, to the extent the Agent (acting reasonably and after consultation with the Company) specifies to be necessary, be amended to comply with any generally accepted conventions and market practice in the Relevant Interbank Market and otherwise to reflect the change in currency.
30.	SET-OFF
	Without prejudice to the normal rights of the Finance Parties at law, after the occurrence of an Event of Default which is continuing, a Finance Party may set off any matured obligation due from an Obligor under the Finance Documents (to the extent beneficially owned by that Finance Party) against any matured obligation owed by that Finance Party to that Obligor, regardless of the place of payment, booking branch or currency of either obligation. If the obligations are in different currencies, the Finance Party may convert either obligation at a market rate of exchange in its usual course of business for the purpose of the set-off. That Finance Party shall promptly notify that Obligor of any such set-off or conversion.
31.	NOTICES
31.1	Communications in writing
	Any communication to be made under or in connection with the Finance Documents shall be made in writing and, unless otherwise stated, may be made by fax or letter.
31.2	Addresses
	The address and fax number (and the department or officer, if any, for whose attention the communication is to be made) of each Party for any communication or document to be made or delivered under or in connection with the Finance Documents is:

(a)	in the case of the Company, that identified with its name below;
(b)	in the case of each Lender or any other Obligor, that notified in writing to the Agent on or prior to the date on which it becomes a Party; and
(c)	in the case of the Agent, that identified with its name below,

	or any substitute address, fax number or department or officer as the Party may notify to the Agent (or the Agent may notify to the other Parties, if a change is made by the Agent) by not less than five Business Days’ notice.
31.3	Delivery
(a)	Any communication or document made or delivered by one person to another under or in connection with the Finance Documents will only be effective:

(i) if by way of fax, when received in legible form; or

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(ii) if by way of letter, when it has been left at the relevant address or five Business Days after being deposited in the post postage prepaid in an envelope addressed to it at that address,

	and, if a particular department or officer is specified as part of its address details provided under Clause 31.2 (Addresses), if addressed to that department or officer.
(b)	Any communication or document to be made or delivered to the Agent will be effective only when actually received by the Agent and then only if it is expressly marked for the attention of the department or officer identified with the Agent’s signature below (or any substitute department or officer as the Agent shall specify for this purpose).
(c)	All notices from or to an Obligor shall be sent through the Agent.
(d)	Any communication or document made or delivered to the Company in accordance with this Clause will be deemed to have been made or delivered to each of the Obligors.
31.4	Notification of address and fax number
	Promptly upon receipt of notification of an address and fax number or change of address or fax number pursuant to Clause 31.2 (Addresses) or changing its own address or fax number, the Agent shall notify the other Parties.
31.5	Electronic communication
(a)	Any communication to be made between the Agent and a Lender or an Obligor and the Agent under or in connection with the Finance Documents may be made by electronic mail or other electronic means, if the Agent and the relevant Lender or, as appropriate, the relevant Obligor and the Agent:

(i)	agree that, unless and until notified to the contrary, this is to be an accepted form of communication;
(ii)	notify each other in writing of their electronic mail address and/or any other information required to enable the sending and receipt of information by that means; and
(iii)	notify each other of any change to their address or any other such information supplied by them.

(b)	Any electronic communication made between the Agent and a Lender or an Obligor and the Agent will be effective only when actually received in readable form and in the case of any electronic communication made by a Lender to the Agent or an Obligor to the Agent only if it is addressed in such a manner as the Agent shall specify for this purpose.
(c)	The ability of an Obligor to use electronic communications is without prejudice to its obligation to submit any Utilisation Request, Selection Notice, Accession Letter, Resignation Letter or Compliance Certificate in the form required under this Agreement or any other document or notice which requires the signature of any director or authorised signatory of an Obligor.

31.6	English language
(a)	Any notice given under or in connection with any Finance Document must be in English.
(b)	All other documents provided under or in connection with any Finance Document must be:

(i) in English; or

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(ii) if not in English, and if so required by the Agent, accompanied by a certified English translation and, in this case, the English translation will prevail unless the document is a constitutional, statutory or other official document.

32.	CALCULATIONS AND CERTIFICATES
32.1	Accounts
	In any litigation or arbitration proceedings arising out of or in connection with a Finance Document, the entries made in the accounts maintained by a Finance Party are prima facie evidence of the matters to which they relate.
32.2	Certificates and Determinations
	Any certification or determination by a Finance Party of a rate or amount under any Finance Document shall set out the basis of calculation in reasonable detail and is prima facie evidence of the matters to which it relates.
32.3	Day count convention
	Any interest, commission or fee accruing under a Finance Document will accrue from day to day and is calculated on the basis of the actual number of days elapsed and a year of 365 days in the case of sterling or 360 days in the case of euros and US Dollars or, in any case where the practice in the Relevant Interbank Market differs, in accordance with that market practice.
33.	PARTIAL INVALIDITY
	If, at any time, any provision of the Finance Documents is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions nor the legality, validity or enforceability of such provision under the law of any other jurisdiction will in any way be affected or impaired.
34.	REMEDIES AND WAIVERS
	No failure to exercise, nor any delay in exercising, on the part of any Finance Party, any right or remedy under the Finance Documents shall operate as a waiver, nor shall any single or partial exercise of any right or remedy prevent any further or other exercise or the exercise of any other right or remedy. The rights and remedies provided in this Agreement are cumulative and not exclusive of any rights or remedies provided by law.
35.	AMENDMENTS AND WAIVERS
35.1	Required consents
(a)	Subject to Clause 35.2 (Exceptions) any term of the Finance Documents may be amended or waived only with the consent of the Majority Lenders and the Obligors and any such amendment or waiver will be binding on all Parties.
(b)	The Agent may effect, on behalf of any Finance Party, any amendment or waiver permitted by this Clause.
35.2	Exceptions
(a)	An amendment or waiver that has the effect of changing or which relates to:

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(i)	the definition of “EURIBOR”, “LIBOR” or “Majority Lenders” in Clause 1.1 (Definitions);
(ii)	an extension to the date of payment of any amount under the Finance Documents;
(iii)	a reduction in the Margin or a reduction in the amount of any payment of principal, interest, fees or commission payable;
(iv)	an increase in or an extension of any Commitment;
(v)	a change to the Borrowers or Guarantors other than in accordance with Clause 25 (Changes to the Obligors);
(vi)	any provision which expressly requires the consent of all the Lenders; or
(vii)	Clause 2.2 (Finance Parties’ rights and obligations), Clause 24 (Changes to the Lenders), Clause 28 (Sharing among the Finance Parties), or this Clause 35,

	shall not be made without the prior consent of all the Lenders.
(b)	An amendment or waiver which relates to the rights or obligations of the Agent or the Arranger may not be effected without the consent of the Agent or the Arranger.
36.	COUNTERPARTS
	Each Finance Document may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of the Finance Document.

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SECTION 12

GOVERNING LAW AND ENFORCEMENT

37.	GOVERNING LAW
	This Agreement is governed by English law.
38.	ENFORCEMENT
38.1	Jurisdiction
(a)	The courts of England have exclusive jurisdiction to settle any dispute arising out of or in connection with this Agreement (including a dispute regarding the existence, validity or termination of this Agreement) (a “Dispute”).
(b)	The Parties agree that the courts of England are the most appropriate and convenient courts to settle Disputes and accordingly no Party will argue to the contrary.
(c)	This Clause 38.1 is for the benefit of the Finance Parties only. As a result, no Finance Party shall be prevented from taking proceedings relating to a Dispute in any other courts with jurisdiction. To the extent allowed by law, the Finance Parties may take concurrent proceedings in any number of jurisdictions.
38.2	Service of process
	Without prejudice to any other mode of service allowed under any relevant law, each Obligor (other than an Obligor incorporated in England and Wales):

(a)	irrevocably appoints the Company as its agent for service of process in relation to any proceedings before the English courts in connection with any Finance Document; and
(b)	agrees that failure by a process agent to notify the relevant Obligor of the process will not invalidate the proceedings concerned.

This Agreement has been entered into on the date stated at the beginning of this Agreement.

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The Company
INTERCONTINENTAL HOTELS GROUP PLC
Address:	67 Alma Road
	Windsor
	Berkshire SL4 3HD
Fax No:	01753 410101
Attention:	The Company Secretary
cc:	Treasurer
	InterContinental Hotels Group PLC
	No 1 First Avenue
	Centrum 100
	Burton on Trent
	Staffordshire DE14 2WB
Fax No:	01283 514767
By:
The Original Borrowers
INTERCONTINENTAL HOTELS GROUP PLC
Address:	67 Alma Road
	Windsor
	Berkshire SL4 3HD
Fax No:	01753 410101
Attention:	The Company Secretary
cc:	Treasurer
	InterContinental Hotels Group PLC
	No 1 First Avenue
	Centrum 100
	Burton on Trent
	Staffordshire DE14 2WB
Fax No:	01283 514767
By:

INTERCONTINENTAL HOTELS LIMITED
Address:	67 Alma Road
	Windsor
	Berkshire SL4 3HD
Fax No:	01753 410101
Attention:	The Company Secretary
cc:	Treasurer
	InterContinental Hotels Group PLC
	No 1 First Avenue
	Centrum 100
	Burton on Trent
	Staffordshire DE14 2WB
Fax No:	01283 514767
By:
SIX CONTINENTS LIMITED
Address:	67 Alma Road
	Windsor
	Berkshire SL4 3HD
Fax No:	01753 410101
Attention:	The Company Secretary
cc:	Treasurer
	InterContinental Hotels Group PLC
	No 1 First Avenue
	Centrum 100
	Burton on Trent
	Staffordshire DE14 2WB
Fax No:	01283 514767
By:

The Original Guarantors

INTERCONTINENTAL HOTELS GROUP PLC

By:

INTERCONTINENTAL HOTELS LIMITED

By:

SIX CONTINENTS LIMITED

By:

The Arranger

BANK OF AMERICA, N.A.

By:

THE BANK OF TOKYO-MITSUBISHI UFJ, LTD.

By:

BARCLAYS CAPITAL

By:

HSBC BANK PLC

By:

LLOYDS TSB CORPORATE MARKETS

By:

THE ROYAL BANK OF SCOTLAND PLC

By:

SOCIÉTÉ GÉNÉRALE CORPORATE & INVESTMENT BANKING

By:

WESTLB AG, LONDON BRANCH

By:

The Original Lenders

BARCLAYS BANK PLC

By:

BoA NETHERLANDS COÖPERATIEVE U.A.

By:

HSBC BANK PLC

By:

LLOYDS TSB BANK PLC

By:

SOCIÉTÉ GÉNÉRALE

By:

THE BANK OF TOKYO-MITSUBISHI UFJ, LTD.

By:

THE ROYAL BANK OF SCOTLAND PLC

By:

WESTLB AG, LONDON BRANCH

By:

BBVA IRELAND PLC.

By:

CITIBANK, N.A. LONDON BRANCH

By:

JPMORGAN CHASE BANK, N.A.

By:

SCOTIABANK EUROPE PLC

By:

SVENSKA HANDELSBANKEN AB (PUBL)

By:

SUNTRUST BANK

By:

DBS BANK LTD., LONDON BRANCH

By:

WESTPAC BANKING CORPORATION
ABN 33 007 457 141

By:

The Agent
HSBC BANK PLC
Address:	8 Canada Square
	London
	E14 5HQ
Fax No:	+44 20 7991 4348
Attention:	Corporate Trust & Loan Agency
By:

EX-8

Exhibit 8

List of Subsidiaries

American Commonwealth Assurance Co. Ltd.	Bermuda
Arabian Hotel Management Co. LLC	Oman
Asia Pacific Holdings Limited	England
Avendra LLC	Delaware, USA
Barclay Operating Corp.	New York, USA
BBJV Investments Limited	England
BHMC Canada Inc.	Canada
BHR Holdings B.V.	The Netherlands
BHR Luxembourg S.A.R.L.	Luxembourg
BHR Overseas (Finance) B.V.	The Netherlands
BHR Overseas (Finance) B.V. — Austrian Branch	The Netherlands
BHR Pacific Holdings, Inc.	Delaware, USA
BHR Services (France) S.A.S.	France
BHR US Holdings B.V.	The Netherlands
BHTC Canada Inc.	Canada
Bristol Oakbrook Tenant Company	Delaware, USA
C.A. Hotel Guayana	Venezuela
Café Biarritz	Texas, USA
Canabolas Caravan Motel Pty Ltd.	Australia
CDC San Francisco LLC	Delaware & California
Centrum Finance (Guernsey) Ltd.	Channel Islands
China Hotel Investment Ltd	Barbados
Compania Inter-Continental de Hoteles El Salvador S.A.	Venezuela
Cooper Leasing Company	England
Crowne Plaza (Asia Pacific) Ltd.	Hong Kong
Crowne Plaza Amsterdam (Management) BV	The Netherlands
Crowne Plaza LLC	Delaware, USA
Culross Finance Ltd.	Cayman
Dessarrolladora Holiday Inn, S.A. de C.V.	Mexico
Edinburgh IC Limited	Scotland
Emerald Bay Hotel Co. Ltd	Thailand
EMERO BV	The Netherlands
General Innkeeping Acceptance Corporation	Tennessee, USA
Gestion Hotelera Gestel, C.A.	Venezuela
Golden Prague Hotel Services s.r.o.	Czech Republic
Grand Hotel du Congo SZARL	Rep of Congo, Zaire
Grand Hotel Inter-Continental Paris SNC	France
Graviss Hospitality Limited	India
Guangzhou SC Hotels Services Ltd.	China
H.I (Burswood) Pty Ltd.	Australia
H.I (Burswood) Trust	Australia
H.I. Mexicana Servicios, SA de CV	Mexico
H.I. Soaltee Hotel Co. (P) Ltd.	Hong Kong
H.I. Soaltee Management Company Ltd	Hong Kong
H.I. Sugarloaf LLC	Georgia, USA
Hale International Ltd.	British Virgin Islands
HC International Holdings, Inc.	Delaware, USA
HH France Holdings SAS	France
HH Hotels (EMEA) BV	The Netherlands
HH Hotels (EMEA) BV — Egyptian Branch	Egypt
HH Hotels (EMEA) BV — Russian Branch	Russia
HH Hotels (Romania) SRL	Romania
HH Hotels Tunisia SARL	Tunisia
HI (Ireland) Ltd.	Eire
HIA (T) Pty Ltd.	Australia
HIM (Aruba) NV	Aruba

Holiday Hospitality Franchising, Inc.	Delaware, USA
Holiday Inn Cairns Pty Ltd.	Australia
Holiday Inn Mexicana S.A.	Mexico
Holiday Inns (Beijing) Ltd.	Hong Kong
Holiday Inns (Casablanca) Ltd	Hong Kong
Holiday Inns (China) Ltd.	Hong Kong
Holiday Inns (Chongqing), Inc.	Tennessee, USA
Holiday Inns (Courtalin) Holdings SAS	France
Holiday Inns (Courtalin) SAS	France
Holiday Inns (Downtown Beijing) Ltd.	Hong Kong
Holiday Inns (England) Ltd.	England
Holiday Inns (Germany) LLC	Tennessee, USA
Holiday Inns (Germany) LLC — German Branch	Germany
Holiday Inns (Guangzhou), Inc.	Tennessee, USA
Holiday Inns (Jamaica) Inc.	Tennessee, USA
Holiday Inns (Jamaica) Inc. — Jamaica Branch	Jamaica
Holiday Inns (Korea) Ltd.	Hong Kong
Holiday Inns (Macau) Ltd.	Hong Kong
Holiday Inns (Malaysia) Ltd.	Hong Kong
Holiday Inns (Middle East) Ltd.	Hong Kong
Holiday Inns (Nepal) Ltd.	Hong Kong
Holiday Inns (Philippines), Inc.	Tennessee, USA
Holiday Inns (Philippines), Inc. — Philippines Branch	Philippines
Holiday Inns (Saudi Arabia), Inc.	Tennessee, USA
Holiday Inns (Shanghai) Ltd.	Hong Kong
Holiday Inns (South East Asia) Inc.	Tennessee, USA
Holiday Inns (South East Asia) Inc. — Singapore Branch	Singapore
Holiday Inns (Suisse) SA	Switzerland
Holiday Inns (Thailand) Ltd.	Hong Kong
Holiday Inns (The Netherlands) Inc.	Tennessee, USA
Holiday Inns (UK), Inc.	Tennessee, USA
Holiday Inns (UK), Inc. — Malta Branch	Malta
Holiday Inns (UK), Inc. — UK Branch	England
Holiday Inns (Xiamen) Ltd.	Hong Kong
Holiday Inn (Birmingham Airport) Ltd	England
Holiday Inns Crowne Plaza (Hong Kong), Inc.	Tennessee, USA
Holiday Inns de Espana S.A.	Spain
Holiday Inns Holdings (Australia) Pty Ltd.	Australia
Holiday Inns Inc.	Delaware, USA
Holiday Inns Investment (Nepal) Ltd.	Hong Kong
Holiday Inns of America (UK) Ltd.	England
Holiday Inns of Belgium NV	Belgium
Holiday Inns of Belgium NV — Swedish Branch	Sweden
Holiday Pacific Equity Corporation	Delaware, USA
Holiday Pacific LLC	Delaware, USA
Holiday Pacific Partners, LP	Delaware, USA
Hospitality Network Corporation	Japan
Hotel Forum Ltd.	England
Hotel Inter-Continental London Ltd.	England
Hotel InterContinental London (Holdings) Limited	England
Hoteles Estelar de Colombia S.A.	Colombia
Hoteles Y Turismo HIH Srl	Venezuela
IC International Hotels Limited Liability Company	Russia
IC US (Holdings) LP	Delaware, USA
IHC (Thailand) Ltd.	Thailand
IHC Buckhead LLC	Georgia, USA

IHC Edinburgh (Holdings)	England
IHC Hopkins (Holdings) Corp.	Delaware, USA
IHC Hotel Ltd.	England
IHC Inter-Continental (Holdings) Corp.	Delaware, USA
IHC London (Holdings)	England
IHC May Fair (Holdings) Ltd.	England
IHC May Fair Hotel Ltd.	England
IHC M-H (Holdings) Corp.	Delaware, USA
IHC Overseas (U.K.) Ltd.	England
IHC Sao Paulo Hoteleria Limitada	Brazil
IHC UK (Holdings) Ltd	England
IHC United States (Holdings) Corp.	New York, USA
IHC Willard (Holdings) Corp.	Delaware, USA
IHG (Australasia) Limited	Singapore
IHG ANA Hotels Group Japan LLC	Japan
IHG ANA Hotels Holdings Co.	Japan
IHG Bangkok Limited	BVI
IHG Community Development, LLC	Georgia, USA
IHG Cyprus Limited	Cyprus
IHG ECS (Barbados) SRL	Barbados
IHG Franchising Brasil Ltda	Brazil
IHG Franchising DR Corporation	Delaware, USA
IHG Franchising DR Corporation — Dominican Republic Branch	Delaware, USA
IHG Franchising LLC	Delaware, USA
IHG Hotels (New Zealand) Limited	New Zealand
IHG Hotels Management (Australia) Pty Limited	Australia
IHG IT Services (India) Private Limited	India
IHG Japan (Management) LLC	Japan
“IHG Management” d.o.o. Beograd	Serbia
IHG Management (Maryland) LLC	Maryland, USA
IHG Management (Netherlands) B.V.	The Netherlands
IHG Management (Netherlands) B.V. — Indonesia Branch	Indonesia
IHG (Marseille) SAS	France
IHG Queenstown Limited	New Zealand
IHG Systems Pty Ltd	Australia
IHG Szalloda Budapest Szolgaltato Kft	Hungary
IHG (Victoria Park) Pty Ltd	Australia
Illinois Hotels Corp.	Delaware, USA
IND East Village SD Holdings LLC	Delaware & California, USA
InterContinental (Branston) 1 Ltd	England
Inter-Continental D.C. Operating Corp.	Delaware, USA
Inter-Continental Florida Investment Corp.	Delaware, USA
Inter-Continental Florida Partner Corp.	Delaware, USA
InterContinental Gestion Hotelera S.L.	Spain
InterContinental Hong Kong Ltd.	Hong Kong
Inter-Continental Hospitality Corporation	Delaware, USA
InterContinental Hotelbetriebsfuhrungs GmbH	Austria
Inter-Continental Hotel Investment (S) Pte. Ltd.	Singapore
Inter-Continental Hoteleira Limitada	Brazil
Inter-Continental Hotels (Montreal) Operating Corp.	Quebec, Canada
Inter-Continental Hotels (Montreal) Owning Corp.	Quebec, Canada
Inter-Continental Hotels (Overseas) Ltd.	England
InterContinental Hotels (Puerto Rico) Inc	Puerto Rico
Inter-Continental Hotels (Singapore) Pte. Ltd.	Singapore

Inter-Continental Hotels Corporation	Delaware, USA
Inter-Continental Hotels Corporation — Cairo Branch	Egypt
Inter-Continental Hotels Corporation — Jordan Branch	Jordan
Inter-Continental Hotels Corporation — Malta Branch	Malta
Inter-Continental Hotels Corporation — Philippines Branch	Philippines
Inter-Continental Hotels Corporation — Poland Branch	Poland
Inter-Continental Hotels Corporation — Portugal Branch	Portugal
Inter-Continental Hotels Corporation — Tel Aviv Branch	Israel
Inter-Continental Hotels Corporation de Venezuela C.A.	Venezuela
Intercontinental Hotels Corporation Limited	Bermuda
Intercontinental Hotels Corporation Limited — Egypt Branch	Egypt
Intercontinental Hotels Corporation Limited — Kenya Branch	Kenya
Intercontinental Hotels Corporation Limited — Saudi Branch	Saudi
InterContinental Hotels Group (Asia Pacific) Pte Ltd	Singapore
InterContinental Hotels Group (Asia Pacific) Pte Ltd — Korean Branch	Korea
InterContinental Hotels Group (Australia) Pty Limited	Australia
InterContinental Hotels Group (Canada) Inc.	Canada
InterContinental Hotels Group (Espana) SA	Spain
InterContinental Hotels Group (Greater China) Limited	Hong Kong
InterContinental Hotels Group (Japan) Inc.	Tennessee
InterContinental Hotels Group (Japan) Inc. — Japan Branch	Japan
InterContinental Hotels Group (Management Services) Ltd	England
InterContinental Hotels Group (New Zealand) Limited	New Zealand
InterContinental Hotels Group (Shanghai) Ltd	China
InterContinental Hotels Group Customer Services Ltd.	England
InterContinental Hotels Group de Brasil Limitada	Brazil
InterContinental Hotels Group Finance (CI)	Jersey
InterContinental Hotels Group Healthcare Trustee Ltd	England
InterContinental Hotels Group (India) Pvt. Ltd.	India
InterContinental Hotels Group Operating Corp.	USA
InterContinental Hotels Group PLC	England
InterContinental Hotels Group Resources Inc	Delaware, USA
InterContinental Hotels Group Resources Inc — Guam Branch	Guam
InterContinental Hotels Group Services Company	England
InterContinental Hotels Italia, SrL	Italy
InterContinental Hotels Limited	England
Intercontinental Hotels Management GmbH	Germany
InterContinental Hotels Nevada Corporation	Nevada
Inter-Continental Hotels of San Francisco Inc.	Delaware, USA
Inter-Continental Hotels Saudi Arabia Ltd.	Saudi Arabia
Inter-Continental Management (Australia) Pty Limited	Australia
InterContinental Overseas Holding Corporation	Delaware, USA
InterContinental Overseas Holding Corporation — Azerbaijan Branch	Azerbaijan
InterContinental Overseas Holding Corporation — Bermuda Branch	Bermuda
InterContinental Overseas Holding Corporation — Czech Republic Branch	Czech Republic

InterContinental Overseas Holding Corporation — Egyptian Branch	Egypt
InterContinental Overseas Holding Corporation — Jamaican Branch	Jamaica
InterContinental Overseas Holding Corporation — Kazakhstan Branch	Kazakhstan
InterContinental Overseas Holding Corporation — Slovakia Branch	Slovakia
InterContinental Overseas Holding Corporation — Ukraine Branch	Ukraine
InterContinental (PB) 1	England
InterContinental (PB) 2 Limited	England
Inthotel SA	Spain
Kenya Hotel Properties Ltd.	Kenya
Kumul Hotels Ltd.	Papua New Guinea
Lane Field South Hotel Management LLC	Delaware, USA
Louisiana Acquisitions Corp.	Delaware, USA
Maya Baiduri Sdn Bhd	Malaysia
Mifala Holdings (Vanuatu) Ltd.	Vanuatu
Nuevas Fronteras S.A.	Argentina
OSPR Pty Ltd.	Australia
Panacon	Louisiana, USA
Parkroyal Motor Hotels Pty Ltd.	Australia
Perseus Holding Corp.	Delaware, USA
Pershing Associates	District of Columbia
Pollstrong Limited	England
Powell Pine, Inc.	Delaware, USA
President Hotel & Tower Co Ltd.	Singapore
Priscilla Holiday of Texas, Inc.	Delaware, USA
P.T. Jakarta International Hotels & Development	Indonesia
PT SC Hotels & Resorts Indonesia	Indonesia
Resort Services International (Cayo Largo) L.P.	Georgia, USA
SC Cellars Ltd.	England
SC ESOP Trustee (Jersey) Ltd.	Jersey
SC Finance Investments Two Company	England
SC Hotels International Services, Inc.	Delaware, USA
SC Investment Minorities Ltd.	England
SC Investments Number 2 Ltd.	England
SC Investments Number 3 Ltd.	England
SC Leisure Group Ltd.	England
SC Luxembourg Investments SARL	Luxembourg
SC NAS 2 Ltd.	England
SC NAS 3	England
SC QUEST Ltd	England
SC Racing Gibraltar	Gibraltar
SC Reservations (Philippines) Inc	Tennessee, USA
SC Reservations (Philippines) Inc — Philippines Branch	Phillippines
SC Wine Bars Ltd.	England
SCH Insurance Company	Vermont, USA
SCHIL (Jamaica) Ltd	Jamaica
SCHIL Investment (Barbados) Ltd	Barbados
SCIH Branston 1	England
SCIH Branston 2	England
SCIH Branston 3	England
SFH Associates L.P.	California, USA
Six Continents Corporate Services	England

Six Continents Holdings Ltd.	England
Six Continents Hotels de Colombia SA	Colombia
Six Continents Hotels International Ltd.	England
Six Continents Hotels, Inc.	Delaware
Six Continents International Holdings BV	The Netherlands
Six Continents Investments Ltd.	England
Six Continents Limited (formerly PLC)	England
Six Continents Overseas Holdings Ltd.	England
Six Continents Restaurants Ltd.	England
SixCo Financing 1	England
SixCo North America, Inc.	Delaware
Soaltee Hotel Ltd.	Nepal
Societe des Grands Hotels du Liban	Lebanon
Societe des Hotels InterContinental France SNC	France
Societe Immobiliere Kinoise SZARL	Rep of Congo, Zaire
Societe Nouvelle du Grand Hotel SA	France
Southern Pacific Hotel Corp. (BVI) Ltd.	British Virgin Islands
Southern Pacific Hotel Corporation Sdn Bhd	Malaysia
Southern Pacific Hotels Pty Ltd.	Australia
Southern Pacific Hotels Properties Limited	British Virgin Islands
Southwick Ltd.	Cayman
SPHC (Asia) Limited	Hong Kong
SPHC (IP) Pty Ltd.	Australia
SPHC Group Pty Ltd.	Australia
SPHC Management Ltd.	Papua New Guinea
SSABCO Ltd.	England
Tahiti Beachcomber SA	Tahiti
TAK How Investment Limited	Hong Kong
The Hotel Clearing Corp.	Delaware, USA
THISCO	Delaware, USA
Tian An Hotels International Limited	Hong Kong
TLCI Limited	New Zealand/Cook Islands
Top of the Cross Pty Ltd.	Australia
TotRusUs (Russian Branch of HH Hotels (EMEA) BV)	Russia
Travel Holdings (Australia) Pty Ltd.	Australia
Trifaith Investments Ltd.	British Virgin Islands
Union Leasing Company Ltd.	England
Universal de Hoteles SA	Colombia
White Shield Insurance Company Ltd.	Gibraltar
Willard Associates	District of Columbia
World Trade Center Montreal Hotel Corp.	Quebec, Ontario
Xenia Hotel Abwicklungs GmbH	Austria
Yokohama Grand Intercontinental Hotel Co. Ltd.	Japan

EX-12.A

Exhibit 12(a)

I, Andrew Cosslett, certify that:

1. I have reviewed this annual report on Form 20-F of InterContinental Hotels Group PLC;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

4. The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and

5. The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.

Date: April 7, 2009

[Signature]	/s/ Andrew Cosslett
[Title]	Chief Executive

EX-12.B

Exhibit 12(b)

I, Richard Solomons, certify that:

1. I have reviewed this annual report on Form 20-F of InterContinental Hotels Group PLC;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

4. The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and

5. The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.

Date: April 7, 2009

[Signature]	/s/ Richard Solomons
[Title]	Finance Director

EX-13.A

Exhibit 13(a)

906 Certification

The certification set forth below is being submitted in connection with the Annual Report on Form 20-F for the year ended December 31, 2008 (the “Report”) for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code.

Andrew Cosslett, the Chief Executive Officer and Richard Solomons, the Finance Director of InterContinental Hotels Group PLC, each certifies that, to the best of his knowledge:

1.	the Report fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act; and
2.	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of InterContinental Hotels Group PLC.

Date: April 7, 2009

By:	/s/ Andrew Cosslett
	Name:	Andrew Cosslett
	Title:	Chief Executive
By:	/s/ Richard Solomons
	Name:	Richard Solomons
	Title:	Finance Director